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There have been many queries from customers and partners on how to manage taxation for United States as the tax rules are very complex and rates change very frequently.

Incase you have a business involving lot of products coming under exemptions and have business in many states its recommend to user third party vendors for tax calculation to get up to date tax rates with Vertex or Avalara .

Please note, for Avalara we are are currently in pilot phase and it will be very soon be generally available.

Overview

As taxes in United States change very frequently, both in terms of law and also tax rates in each postal code if you have complex tax scenarios(eg webshop) and business in multiple states we recommend to use out of the box integration offered in Business ByDesign and Vertex/Avalara.

Current Capabilities (uptill 1805)

For latest capabilities please refer to

https://blogs.sap.com/2018/10/22/business-bydesign-release-highlights-1811/

We support Vertex and Avalara for fetching the latest tax rates for the postal code associated for the seller and buyer in all documents in ByD which attract taxes for example Sales Orders, Purchase Orders, Contracts, Invoices, Manual Tax Entries, etc..

Salient Features

Out-of-the-box integration

SAP Business ByDesign offers out-of-the-box integration capabilities making sure that a key user can set up the integration seamlessly and with easy.

Real-Time Tax rates in every document

SAP Business ByDesign makes real time call to Vertex/Avalara for every document which attracts taxes making sure that all documents have the latest tax rates

Performance Optimization

As both Vertex and Avalara charge on volume SAP has buffers built on its side to make sure unnecessary/superfluous calls to are not made. For example, incase a sales order if 1000 lines items are added, even though taxes are applicable for each item SAP buffers items with same postal code data and makes minimal calls to Vertex/Avalara to save on cost of the customer.Incase all items have the same delivery address then only one call is made to Vertex/Avalara.

Ease of Returns

The tax report generated from ByD can be downloaded and uploaded directly to Vertex to use Vertex file your Tax Returns.

Planned Innovations – 1711

SAP Business ByDesign Address harmonization with Vertex

During the course of usage we observed lot of customers had addresses in SAP Business ByDesign with incorrect combination of State and postal code.

This would lead to inconsistent data as vertex would be returning tax rates based on postal code while tax reporting structures have region as a key field.To avoid save of inconsistent data ByD would terminate the process essentially causing a show stopper to avoid any further usage of such addresses.

With 1711 , incase such situation is encountered SAP ByD would indicate the incorrect address and still stop the processing of the transaction but not terminate it. Customers can the correct the combination and proceed with the document processing.

Planned Innovations
List as per ranking of feature

Following are the features we are in discussion to enable as part of the interface.Please do provide feedback incase you feel that this ranking can be improved or if you have a feature request which is not part of the backlog.

Product Taxability

Enhance the interface to include Product Type and other necessary product details to enable more accurate tax rate determination to include exemptions for Products

Location Code Based Taxes

Enhance the interface for more accurate tax rates by passing additional address information to contain location code. This will enable determination of correct Situs for correct “Sales” or “Use” tax determination

Exemption Certificate Management

Bulk upload exemption certificates or upload them one at a time, set effective and expiration dates, store the certificates, and manage customer exceptions.

Address Validation

Vertex verifies address information to target the specific Tax Area ID for the most accurate rate.

This will be provided first for the accounts and supplier address data. This will be further extended to also validate address if overwritten in sales/purchase documents.

Product Direction 

General Availability of Avalara

Currently pilot testing of Avalara integration is happened with selected customers. After the pilot phase this integration feature would be open for General Availability.

Supporting Canada

We have lot of enquiries for Canada and given the tax request structures would be similar to US this would be a country we would like to explore

Supporting other third party vendors

We are exploring possibilities to make integration also with other third party offerings like OneSource to enable ByD to support larger customer base.

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8 Comments

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  1. François-Xavier Lepoutre

    Hi Parul,

    Great article !

    In Vertex it is possible to set up each US state to determine whether or not we collect taxes in this state. Will SAP return a 0% tax in states where there is no Nexus, based on Vertex configuration ?

    Thanks,

    (0) 
    1. Parul Sharma
      Post author

      Hello Francois,

      Thanks for the feedback and sorry I missed this notification

      Nexus determination happens in ByD so incase Nexus is not maintained in ByD you will see 0% irrespective of tax determination engine configuration.

       

      (0) 
    1. Parul Sharma
      Post author

      Hello Tobias,

      Its available in pilot phase, incase you want to use please raise an incident from the tenant where this needs to be enabled . We will do necessary checks and explain the limitation before we switch it on  that tenant.

      Regards,

      Parul

       

      (0) 
  2. Frank Pohlmann

    Hi Parul,

    it’s not clear for me if Product Taxability with Vertex is completely implemented now or not. And also exemptions?

    Is there any possiblility to do with PDI if not covered in standard?

    Please can you clarify what is currently possible?

    Best regards

    Frank

     

    (0) 
  3. David Leon

    Hi Parul,

    I have some questions I hope you can share some guidance:

    1.- When are the improvement of the vertex interface going to reach general availability?

    2.- When Is the integration with Avalara reach general availability?

    3.- Can you please share the scope for Avalara integration?

    4.- Can you please share some details of the improvements for Vertex?

     

    Kind regards,

    David

     

     

     

    (0) 
    1. Parul Sharma
      Post author

      Hello David,

      1.- When are the improvement of the vertex interface going to reach general availability? – we have planned improvements in 1811, 1902 and 1905 releases.This is also reflected in the SAP RoadMap

      2.- When Is the integration with Avalara reach general availability? – We are waiting for more customers before we can release this as GA.

      3.- Can you please share the scope for Avalara integration? – Scope is same for Vertex and Avalara integration

      4.- Can you please share some details of the improvements for Vertex? – Please refer to the latest blog https://blogs.sap.com/2018/10/22/business-bydesign-release-highlights-1811/

       

      (0) 

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