Implementation of SAP Tax Compliance Management at BASF Pascal Mattern, BASF.

Transcription

1 Implementation of SAP Tax Compliance Management at BASF Pascal Mattern, BASF

2 Agenda 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 2

3 VAT Compliance If you think, compliance is expensive, try non-compliance. Former Deputy U.S. Attorney General Paul McNulty 3

4 Why concern with VAT? Example: VAT flows Germany BASF VAT meaning for BASF Customer Sell Buy Supplier Affects every transaction Millions of transactions p.a. Complexity due to diverse and locally different regulations Report VAT meaning for Governments Report Government Authorities Data exchange Report Biggest income source Very sensitive regarding fraud Strong technological efforts to detect fraud Achieve zero mistake in BASF s variety of complex business models 4

5 Scope of Value Added Tax End-to-End (E2E) Processes relevant for VAT Master Data P2P O2C H2R B2R Quality Assurance and Defense Projects e.g. M&A 5

6 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 (Germany, similar in other countries): indication for missing willful intent of tax fraud because ICS is established 6

7 Why is an Internal Control System needed? 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. 7

8 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 High manual effort, error-prone 8

9 SAP Tax Compliance process Generic Process for Continuous TAX Monitoring und Risk Management 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 Example Process based on Data Analysis Solutions on the market 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 Holistic Process for Tax Control System with SAP Tax Compliance Central Check Repository Scenario-Management Continuous Identification of wrong postings Automated Initiation of Correction Measures with Status Management and Documentation Reporting and Optimisation 9

10 Decision to Co-Innovate with Bosch and SAP results in the design of SAP Tax Compliance Management software Guiding principle: How can we automatically identify wrong VAT data and automatically initiate correction and documentation measures to be compliant 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

11 Technical set-up SAP Tax Compliance Management at BASF RFC (e.g. Display FI Docs) SAP GRC FIORI Frontend SAP Tax Compliance COBALT OData SAP PO VAT Collaboration Plattform ABAP Adapter COBALT Oracle DB SAP Smart Data Integration SAP HANA SAP Tax Compliance HANA Application Content, Tables, Views, Procedures, Search Models Ticketing System BASF 11

12 SAP Tax Compliance Management Look & Feel 12

13 SAP Tax Compliance Management - Look & Feel 13

14 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

15 Lessons learned and outlook BASF first company to go live with TCM (Pilot Go-Live ) 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 future 15

16 Thank you very much for your attention, do you have any questions? 16

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