RITA: Registration for Indirect Taxation Abroad – More Than Just a Nice Name
The indirect tax regulations have undergone a fundamental change over time. With growing international economic interdependence and digital economies, many countries over the world allow foreign companies to register for indirect taxes in the country/jurisdiction without setting a permanent establishment.
RITA is the solution in SAP S/4HANA Cloud enabling a single legal entity to perform indirect tax calculations in multiple countries without setting up a local business unit or creating a new legal entity or sub-company. These units might be sales units, plants, or warehouses, which can be registered with the tax authorities. This registration helps to link taxable transactions in foreign countries for indirect tax reporting and comply with the local tax and reporting regulations.
What does this mean for SAP S/4HANA Cloud customers in particular?
In the first place, a customer does not have to run a full-scale implementation with its company code and its related end-to-end processes in the respective country.
The SAP S/4HANA Cloud organizational setup is lean without redundant IT artifacts. The true tax logic is reflected in customizing, which means tax codes are defined for a country instead of a company code. Tax treatment requirements are mapped to automated SAP processes and therefore error-prone manual interventions can be avoided. Legal reporting in tax reporting currency is enabled. With a dashboard function and wizard-like 5-step activation, RITA offers high transparency and an enhanced user experience.
This slim approach allows us to save effort and time, not only during the implementation but during regular tax reporting.
SAP Registration for Indirect Taxation Abroad enables customers to easily extend their business abroad and grow globally.
With the release scope of RITA (Finance and Logistic tax country/regions functionality) and already 9 countries (Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands and Spain), we currently have more than 20 customers using RITA in the countries stated above.
Beyond the already-released scope for RITA, further relevant end-to-end processes and countries have been asked by customers and are now supported within an Early Adopter Care (EAC) program. The first supported processes are Sell from Stock abroad and Procure to Stock abroad, intra- and intercompany stock transfer abroad, intercompany sales from stock abroad, customer consignment abroad, and others. In addition to RITA countries generally available, the following countries are in the scope of EAC as of today: the Czech Republic, Sweden, Switzerland, and South Africa. For more information on the early adopter program for RITA, please check out this link and contact your SAP account team.
One of the core features of RITA is the ability to create a foreign plant in a country other than one of the business’ legal entities. Here are some use cases of early adopter customers who are benefiting from this functionality: A manufacturing customer with their headquarters and legal entity in Belgium. They are using tax registrations in Germany and France for foreign plants. In addition, a Professional service customer with a legal entity in Germany using registration for indirect taxation in the Netherlands participated in the Early Adopter program. Another early adopter with their headquarters located in Austria used tax registration in Germany.
Besides these successfully implemented foreign plants, other customers use RITA with sales processes, stock transfer between countries, intrastate movement tracing, and intrastate declaration for the generation of tax postings.
Overall, the Early Adopter customers provided very positive feedback, especially regarding:
- Very fast RITA implementation in less than 3 months
- Seamless cutover and migration with minimum disruption as the activation is done at the company level
- Elimination of artificial organizational entities from Enterprises Structure Setup
- Initial postings without any hurdles
- High transparency and enhanced user experience as tax codes are defined at the country level and not anymore at the company code level
This positive outcome of the Early Adopter phase is proving the concept of RITA, which should encourage our customers in their plans to extend RITA to further countries.
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