Standard SAP determines a VAT decision using 5 basic VAT determination characteristics:

• Tax departure country
• Tax destination country
• Customer tax classification
• Material tax classification
• Customer VAT ID number ( in the case of EU transactions)

It is possible to manually change any of the above characteristics (with the exception of the customer VAT ID) whilst entering a sales order. This could be done to attempt to overcome a known limitation within SAP VAT determination, and to try and force the correct VAT result.

The following screen demonstrates where in a sales order your order management teams may manually change tax sensitive fields:

Where a business sees a large number of manual changes ( including a large number of cancellations to correct billing documents ), it will be very difficult to demonstrate to tax authorities that sales are dealt within a compliant and systemic manner. As a result, the best approach is to aim for fully automated VAT determination without the possibility of manual changes by non-tax experts.

Download the Guide and find out how you can run a control report that will show exactly what manual changes were made to tax relevant fields in a sales order.