Automated VAT determination of outgoing invoices
SAP developed its VAT determination logic a long time ago (the 1980s), and except for the 'plants abroad' logic, SAP's VAT determination logic has not changed much. That is in contrast with the VAT rules and business models, as these have changed significantly. The VAT landscape and rules have gone from reasonably simple to rather complex. Cross-border transactions changed from solely export to a new category within the EU: Intra community transactions (goods and services) with distinct rules and further formalities to manage. New business models have increased intercompany transactions, chain transactions, drop shipments and pick up transactions.
These are causing IT bottlenecks to implement as Standard SAP VAT determination logic and functionality do not work for these complex dynamic business models. The supplier is responsible for ensuring that all the conditions for applying the zero VAT rate are met. If not, the tax authorities will seek to recover the tax due from this supplier via a tax assessment levy.
Without adjustment of Standard SAP setting, SAP would determine an incorrect VAT treatment. We have developed an SAP add-on that automates the VAT determination of outgoing invoices. We enhance Standard SAP when due to a client's business model, additional VAT functionality is required.