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control, control framework, logic, renaming exercise of tax codes, renaming of tax codes, SAP, SAP add on, SAP SLO renaming tax codes, SLO renaming project, tax code, tax control framework, VAT control framework, VAT for SAP. SAP add-on for VAT, VAT rate change, vat rate decrease, vat rate increase
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.
Indirect Tax Technology 