Renaming exercise of tax codes via System Landscape Optimization


One of SAP’s offerings are SLO (System Landscape Optimization) projects. For indirect tax that could mean a renaming exercise of tax codes – SLO renaming project – to set up a more logical tax code structure in which the different tax categories in each country will have the same meaning.

The result should be: a logical grouping of the various VAT tax codes in all countries.

Such logical re-design of the tax code structure allows centralization of functions regarding indirect tax compliance in Shared Services Centers, as well as implementing control measures in an efficient and effective way. This leads to substantial cost savings and improved indirect tax risk management.

The objectives of SLO projects are:

  • Align organizational structures and processes at the system level to meet the needs of corporate restructuring
  • Align with best practices and IT strategies to realize data harmonization and process optimization
  • Reduce IT complexity and centralize disparate IT solutions

SAP’s approach

The SAP approach for SLO projects regarding the tax code structure is not the most effective and efficient way. In order to keep the historical audit trail, the old active tax codes are duplicated and renamed often with the use of special characters ($,/,\,& etc.).

That causes not only an increase in tax codes but as well a potential shortage of tax codes when in the future country specific tax procedures are used.

As the company’s objective is a logical tax code structure, the use of these special characters ($,/,\,& etc.) does not meet that objective when investigation of historical audit trail is needed (e.g during a tax audit).

Our Taxmarc ™ approach

Taxmarc™ uses a different approach to perform such SLO renaming exercise of tax codes.

In our method, for the old active tax codes no new tax codes have to be set up as this will also follow the new tax code logic.

That means the renaming is no longer causing an extra increase of tax codes and that both ‘old active tax codes’ as new ‘renamed tax codes’ will follow the same logic and use of special characters ($,/,\,& etc.) is avoided.

Taxmarc ™ Time Stamped designed Tax Codes

In addition to such SLO renaming project, Taxmarc™ has also developed a separate solution: Time Stamped designed Tax Codes. That is beneficial when a company would like to keep the current logic also in case of new VAT rate changes.

Downside of the SAP SLO renaming tax codes is that in the future due to global VAT rate changes the overall designed logic will no longer apply in all cases and could in certain cases cause a risk of tax code shortages.

The advantage of this ‘Time Stamped’ solution is also that such a VAT rate change can be implemented beforehand, takes no longer than 2 hours max to set up and has a quick Return on Investment.

Richard Cornelisse
Director Strategy & Sales Taxmarc™

About Richard Cornelisse

I advise multinational businesses in improving the efficiency and effectiveness of their Indirect Tax Function and Tax Control Framework. I started my career as a manager at Arthur Andersen and then became a partner in EY where I led the indirect tax performance team for Netherlands and Belgium. Currently I am a senior managing director of Phenix Consulting. I have over 20 years’ experience advising clients on international VAT issues. I am specialized in the tax aspects of financial transformations, shared service centre migration, and post merger integration work. I am also somewhat of a mentor, giving back to the profession. If you are interested in conversation and discussion, please feel free to contact me.
This entry was posted in Automating complex VAT flows in SAP, Control Framework, enhancement implementation, SAP add on, SAP enhancement point, SAP for VAT, SAP implementation, user exit, VAT automation, VAT Control and tagged , , , , , , , , , , , , , , , . Bookmark the permalink.

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