Client Context
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; and 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.
- 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. 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.
- 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
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
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, and 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.