SAP VAT Review - introduction
During a SAP review we verify the proper working of the implemented VAT configuration. Changes in the business model, master data or legislation will have an impact on the implemented VAT configuration.
The SAP review can demonstrate that the VAT configuration must be improved or that additional control measures should be added to the Tax Control Framework.
The review can also bring errors and risks to light, allowing a more focused data analysis to take place. After the quantification and evaluation of the risks and errors, these are assigned a risk profile in order to be able to test against risk tolerance.
Examples of possible errors in SAP
Not making use of the proper partner functions in SAP for a supplier who provides services in multiple countries and invoices VAT locally. Result: the standard VAT calculation generates incorrect results.
Missing/improper VAT registration numbers in customer master data, such that invoicing requirements are not satisfied for cross-border transactions.
Master data is adjusted and tested in the test environment, but the changes are not included in the final upload to the production system.
The logic of the tax code structure is disrupted by VAT rate changes, something that could have been prevented using the SAP configuration.
When performing reverse charge bookings, VAT rate changes do not get changed.
For cross-border A-B-C transactions, a VAT mismatch between the VAT on procurement and the VAT on sales arises for party B.
Blocked so-called iDoc (electronic interface documents) because of errors in the OBCD design. Suppliers with invoices in other currencies and the VAT amount in Euro, so that the booked VAT amount is incorrect due to an incorrect exchange rate.
Incorrect derivation of VAT registration numbers for cross- border transactions caused by incorrect SAP configuration.
What we offer
Depending on the client's requirements, the following VAT- relevant subjects can be analyzed during a ERP review from for example a risk perspective:
VAT treatment, correctness and the logic of the tax code structure and attributes such as VAT rate, the defined tolerance percentage when calculating VAT paid, the setting for EU-relevant VAT reporting
Incorrect VAT rates and reporting (filing and/or ICL listing)
Conditions tables, records and decision tree logic
Incorrect VAT treatment/code and returns
The derivation from VAT registration numbers on the invoice of the partner functions used – sold_to, ship to, payer and bill_to
Incorrect VAT number on the invoice, no 0% rate possible
VAT code descriptions for invoices
Incorrect sales invoices
iDoc tables, if applicable
Incorrect exchange rates applied