Many SAP clients hold multiple VAT registrations. Due to their organizational structures, centralized functions, and complex business models involving sales of goods, cross-border transactions, and drop shipments, these companies often utilize more than a limited number of tax codes. As a result, they may encounter challenges with the standard SAP tax code design, leading to tax compliance issues and commercial complications.
Standard SAP tax codes have only two characters, limiting the number of available codes. Many companies use a significant number of tax codes and may eventually face a “shortage” of the necessary codes.
When utilizing the tax procedure TAXEUR, companies may experience a limitation of up to 2,116 tax codes.
New tax codes must be established whenever the VAT rate changes, and given the current challenges in the global market, such changes may occur more frequently. Implementing even a single VAT rate change can be time-consuming due to the necessary setup, transportation across SAP landscapes, and the testing cycles that must be completed before going live in production.
The change in the VAT rate significantly impacts an SAP system. In addition to the required changes in SAP itself, all VAT reporting templates (such as Excel or OneSource) must be updated to ensure the correct incorporation of the new VAT codes. Below is a non-exhaustive list of required activities that may need to be addressed during VAT rate changes. The necessity of these activities will depend on the current configuration of VAT functionality; it is also possible that additional activities might be required.
