If your business currently relies on SAP native functionality to manage VAT, we understand the challenges you face.
Of course, every business is different and, for some, native functionality will prove to be an adequate solution. But for others, it could mean asking your tax team to spend valuable time on everything from manually researching rates and rules to making frequent and complex updates to your SAP platform to ensure you remain compliant. As your business grows, it may no longer be efficient to rely solely on the native infrastructure.
So what’s the solution? For most multinational businesses, investing in a specialist tax engine to replace the native VAT functionality within their SAP ERP is the guaranteed path to tax perfection.
But we also know that implementing a tax engine can be a complex project that comes with a significant price tag; at least, one that will require some powers of persuasion if you are to get the necessary budget approved from your company’s decision makers.
To get you started with piecing together a convincing business case, we’ve put together a quick overview of 10 top reasons to invest in a tax engine for SAP in 2022:
1) Achieve accurate VAT calculations in real time
Whether you’re calculating AP or AR, a tax engine determines the relevant tax (including all related logic) and displays full details of each transaction in real time. It’s only ever a click away!
2) Latest rates, rules and logic maintained within your ERP
A tax engine takes care of all the latest updates. China has changed its standard rate? No worries, the tax engine automatically updates and uses the new rate in your transactions immediately. The UK has added a new exemption? Not a problem, consider it covered.
3) Allow your tax team to run custom rules
With a tax engine, your team will be able to easily create custom rules to circumnavigate any potential pitfall or to meet the nuances of any business.
4) Calculate VAT for complex transactions and jurisdictions
Every tax professional has a particular tax that causes a headache each month. Or maybe your pain point is an entire country’s VAT regime? With a tax engine it doesn’t matter as all the rules, rates and regulations are in place. You don’t have to remember a thing!
5) Centralise your VAT management
Multinational organisations often use multiple ERP systems, as well as a plethora of other platforms, to manage business. A tax engine integrates with each of these to provide a central hub for all your tax data.
6) Reduce your audit risk
Using multiple ERPs results in a lack of standardised VAT treatment, while ERPs typically only use summary data to complete VAT calculations. As well as the heightened risk of error, this often leaves businesses unable to explain why particular calculations have been made when it comes to audit. A tax engine removes this threat by relying on transaction-level data and retaining accurate records that can be relied upon at any future audit.
7) Empower your team by giving them full control
Give tax professionals the flexibility to build or adjust tax logic within their tax engine, ensuring they can meet new or evolving requirements.
Why are tax engines becoming more popular?
The complexity of VAT in many of the world’s major jurisdictions is increasing at a rapid rate.
As a result, more than ever before is being demanded of tax teams in large businesses – and we think it’s almost impossible to keep up without the support of technology. If you rely on manual inputs into your SAP ERP to manage tax, it’s almost certain you’ll experience inaccuracies (and non-compliance) sooner rather than later.
It goes without saying that your business must be compliant in every single VAT calculation you complete. But in the modern world, tax authorities are starting to go beyond this to focus on the systems and processes you are using.
It’s no longer enough to simply be compliant; now you must prove it too.
What’s more, tax professionals within your business deserve to focus on much more than routine VAT transactions. There are new markets, new products and new channels for them to tackle, which is why so many organisations are now leaving the monotony of VAT to a tax engine.