Client Context
A global multinational organization, subject to mandatory e-invoicing and near real-time VAT reporting obligations, primarily relied on e-invoicing solutions provided by two external service providers.
Large volumes of transactional data were submitted to tax authorities on a recurring basis, and e-invoices were technically accepted by the authorities’ platforms.
However, acceptance of e-invoices by the tax authorities did not provide assurance that the data submitted through these external e-invoicing solutions was VAT correct and complete. Regardless of the technology used for transmission, the responsibility for VAT accuracy and completeness remained fully with the organization.
While the e-invoicing providers ensured technical connectivity and successful submission, they did not perform substantive VAT validation on the underlying transactional data. As a result, the tax function remained responsible for performing pre-submission VAT checks to ensure correctness and completeness.
Challenge
VAT validation activities were largely manual and expert-driven:
- VAT experts manually extracted data from SAP using standard reports
- Data was reconciled across multiple tables and formats
- Control checks were performed in spreadsheets using sampling techniques
- Findings were identified late in the process, often after submission deadlines
As transaction volumes increased and e-invoicing requirements expanded across countries, this approach became increasingly unsustainable.
Key challenges included:
- Significant time spent on repetitive manual checks
- Limited ability to perform full-population testing
- High dependency on individual VAT experts
- Increased risk of errors going undetected before submission
- Limited documentation to demonstrate effective controls to tax authorities
KGT’s Solution
KGT implemented the SAP VAT Data Analysis add-on solution within the client’s SAP environment.
The SAP add-on automatically extracted all VAT-relevant transactional data and applied predefined tax control checks prior to submission to tax authorities. These automated controls validated whether e-invoice and VAT reporting data was complete, consistent, and aligned with VAT determination logic.
Key elements of the solution included:
- Automated extraction of VAT-relevant SAP data without runtime limitations
- Automated tax controls replacing manual spreadsheet-based checks
- Identification of VAT inconsistencies before e-invoice submission
- Dashboards providing clear insight into exceptions and risk areas
The solution was designed to be flexible. Client-specific VAT controls were added to reflect local reporting requirements, business-specific transaction flows, and internal control standards.
Results
Following implementation, the organization achieved:
- Significant reduction in time spent on pre-submission VAT checks
- Replacement of manual sampling with automated full-population analysis
- Earlier detection of VAT issues before submission to tax authorities
- Reduced dependency on individual tax experts for repetitive checks
- Improved consistency and repeatability of VAT validations
VAT experts were able to shift their focus from data gathering to reviewing and resolving flagged exceptions.
Impact
By using the SAP VAT Data Analysis tool, the organization:
- Increased confidence that submitted e-invoices were VAT correct and complete
- Reduced the risk of post-submission corrections and penalties
- Strengthened its internal VAT control framework
- Improved audit readiness through documented, automated controls
- Created a scalable VAT analytics capability that could be extended to new countries and reporting obligations
The SAP VAT Data Analysis add-on solution enabled the organization to move from manual, resource-intensive VAT validation to a sustainable, automated data analytics approach — ensuring VAT compliance kept pace with growing e-invoicing and real-time reporting requirements.
