Pascal Mattern, BASF...SAP GRC FIORI Frontend COBALT COBALT Oracle DB BASF VAT Collaboration...
Transcript of Pascal Mattern, BASF...SAP GRC FIORI Frontend COBALT COBALT Oracle DB BASF VAT Collaboration...
Agenda
2
The importance and challenges of an internal control system (ICS) for Value Added Tax (VAT)
How SAP Tax Compliance can be used as an ICS with a high degree of automation and compliance
Experiences at BASF with SAP Tax Compliance
VAT Compliance
“If you think, compliance is expensive, try non-compliance.“
Former Deputy U.S. Attorney General Paul McNulty
3
Why concern with VAT?
4
BASF
SupplierCustomer
VAT meaning for BASF
Affects every transaction
Millions of transactions p.a.
Complexity due to diverse and locally different regulations
VAT meaning for Governments
Biggest income source
Very sensitive regarding fraud
Strong technological efforts to detect fraud
Achieve ‘zero mistake’ in BASF’s variety of complex business models
Government Authorities
Sell Buy
Data exchange
Report
ReportReport
Example: VAT flows Germany
Scope of Value Added Tax
5
Master Data
P2P O2C B2R Projectse.g. M&A
Quality Assu-ranceand De-
fense
H2R
End-to-End (E2E) Processesrelevant for VAT
Legal requirements for VAT Compliance
Financial Risk● Output VAT – VAT paid to authorities without being able to reclaim it from customer● Input VAT – VAT paid to customer without being able to reclaim it from authorities● Interest (DE: 6% p.a., BE: 9,x % p.a.) and penalties (PL: 30%, IT: up to 200%)
Compliance Risk● Avoidance of liability● Cf. BMF 2016-05-23 (Germany, similar in other countries): indication for missing willful intent of
tax fraud because ICS is established
6
§
$
Why is an Internal Control System needed?
7
Internal Control System (ICS) for VAT current trends NL – Tax Control Framework / Horizontal Monitoring GB – Group Tax Strategy for Large Businesses
● the approach of the UK group to risk management and governance arrangements in relation to UK taxation
OECD – Co-operative Tax Compliance EU – Certified Tax Payer (CTP) for final regime taxing
intra-Community supplies draft proposal VAT Directive Oct. 4, 2017
DE – Audit Standard 980: Tax Compliance Management
Electronic VAT Books Spain ► Immediate Information Sharing (SII-Suministro Inmediato de
Información) system ► As of now, to be kicked off from 1 January 2017 ► No detailed overview of the requirements available yet ► Legislation is expected to be finalized this year
From 1st July 2016 onwards it is required to provide SAFT-PL files in XML format on request of the Polish Tax authorities.► Filing SAF-T will be mandatory for large taxpayers: employ
more than 250 people or 50 million EUR sales revenue irrespective of whether they are established in Poland or not. Per 1st July 2018 this extended to taxpayers with more than 9 employees or 2 million EUR sales revenue.
Challenges arising during the monthly VAT return
Download Data from SAP to Excel
Work in Excel
Get info from somebody
Correct in SAP, note in Excel
Keep in mind manual corrections to VAT return
Years later the documentation needs to be readily available for audit purposes
8
High manual effort, error-prone
SAP Tax Compliance process
9
Central Check Repository Scenario-ManagementContinuous
Identification of wrong postings
Automated Initiation of Correction Measures with Status Management and
Documentation
Reporting and Optimisation
Generic Process for Continuous TAX Monitoring und Risk Management
Example Process based on Data Analysis Solutions on the market
Holistic Process for Tax Control System with SAP Tax Compliance
Identification of Tax Compliance Requirements
Definition and Implementation of
Queries
Planning and Execution of
Queries
Display of Results and Analysis of Breach of Rules
Initiating and Execution of Correction Measures
Follow-up and Closing of Findings
Reporting and Optimisation
Identification of Tax Compliance Requirements
Definition and Implementation of
Queries
Planning and Execution of
Queries
Display of Results and Analysis of Breach of Rules
Manual Process
Decision to Co-Innovate with Bosch and SAP results in the design of SAP Tax Compliance Management software
Data does not need to be downloaded, no system break
Checks run automatically for each defined period, no manual start necessary
BASF: Ticket System is linked to TCM; TCM can send tickets and receives notification for closing of ticket
Correction done in ERP, manual corrections can be sent as tickets
End-to-end process is documented and compliant
10
Guiding principle:How can we automatically identify wrong VAT data and automatically initiate correction and documentation measures to be compliant
Technical set-up SAP Tax Compliance Management at BASF
11
SAP TaxCompliance
SAP HANA
SAP TaxCompliance
HANA Application Content, Tables, Views, Procedures, Search Models
SAP GRCFIORI Frontend
COBALT
COBALT Oracle DB
BASF
VAT Collaboration
Plattform
Ticketing System
SAP PO
RFC (e.g. Display FI Docs)
OD
ata
ABAP Adapter
SAP Smart Data
Integration
Implementation of SAP Tax Compliance Management at BASF
Country Scope: EU28+CH+NO Approx. 150 Checks:
Basic Checks
• for ongoing VAT and Intrastat-Plausibility Checks
• for retroactive VAT-Risk Management Additional Checks
• according to business structure Country Specific Checks
• according to countries of VAT registration
14
Lessons learned and outlook
BASF first company to go live with TCM (Pilot Go-Live 17.09.2017) It will be several years until audits for 2017 will take place Some wrong VAT determinations could be identified but… … checks also produce many „false positives“ Dedicated team of people with knowledge of both VAT and SAP is needed to refine check logics
and adapt them to changing legislature(at BASF 2 full-time employees)
Tax Compliance Management considered to be used for other taxes as well Implementation of „Smart Automation“ (Machine Learning) in the near future15