ERP Systems & VAT Compliance

Many multinational businesses are under the impression that their advanced Enterprise Resource Planning (ERP) systems can effectively handle the many issues that may arise with value added tax (VAT.) Despite the varying degrees of native VAT functionality included in many ERP systems, their ability to manage value added tax is limited. While correct value added tax rates for a company's specific services and products may be entered into the ERP system when initially set up, VAT tables will require manual updates for a variety of reasons including:

Changes in VAT rates and rules
The introduction of new products or services
New country markets being supplied

Without sufficient VAT software, someone must actively manage the VAT functionality of an ERP system to ensure compliance.

Handling Complex Transaction Processes

In addition, native ERP system functionality for value added tax is not compressive enough to effectively handle more complex transaction processes, such as those handling service transactions. Without the implementation of proper VAT software, manual management of the system's VAT functionality will again be required to achieve VAT compliance, which includes keeping track of the variety of legislative and business changes occurring in numerous territories.

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