ERP implementations in the tax area

In recent years, companies have been consistently increasing their investments in IT system implementation projects, including ERP systems. This is driven by the need to acquire and process a growing amount of information and the opportunity to replace existing solutions with more advanced and efficient technologies.

In the domain of financial and tax processes, the implementation of new solutions presents a unique opportunities for:

The emergence of new, detailed, and real-time reporting obligations (e.g., upcoming e - invoicing in Poland - KSeF) requires increasingly efficient data acquisition and real time verification of its correctness while driving significant technological changes within organizations.

However, implementing a new ERP system poses a challenge for the entire organization, particularly for finance and tax teams. One of key success factors in system transformation is the effective communication between all parties involved in the project, especially between the technical teams responsible for implementation and other business teams.

How do business teams` representatives and technology teams` representatives perceive their mutual cooperation during implementation projects?

Considering the above mentioned study and our ERP implementation experiences in the tax area, it can be concluded that a crucial success factor is a good understanding of legal and business requirements by the IT team and its appropriate translation into feasible system configurations, taking into account technical requirements specified by legislative bodies (such as defined data formats and communication methods). This is particularly critical due to the increasing complexity of new regulatory requirements, the threat of sanctions for incorrect data or delays in reporting, and the rapid pace of digitization.

Multidimensionality of areas subject to adjustment during ERP implementation in the context of tax requirements

Digital transformation is an opportunity for radical change in a short time horizon. Many companies, however, find it very difficult to rationally estimate the direction, scope and priority of changes using technology.

The vast majority of large ERP implementations touch on complex tax reporting areas, leading to the possibility of utilizing multiple layers of the ERP system in data extraction. For instance, VAT reporting and accounting reporting for local/statutory or management purposes typically require configuration at the level of individual transactions. On the other hand, CIT reporting logic may be implemented at the transaction layer, chart of accounts, or through add-on solutions importing and marking data from the accounting books.

Implementing too many configurations at the transactional level in order to acquire data for diverse purposes may result in high maintenance costs or even hinder effective configurations management. Additionally, this approach often complicates data interpretation and rapid processing for basic accounting or management reporting purposes.

The upcoming new reporting obligations like ESG and Pillar II make the decision to choose the architecture of data extraction layers challenging. It requires knowledge of the relevant provisions of law, practical experience in implementation of compliant configurations, and data processing.

ERP system configuration concerns various objects responsible for different elements of tax logic. For instance, tax codes in JPK V7, GTU product codes, and VAT date may be utilized for proper VAT reporting. This information can be assigned to both the type of journal, the document type in the system, and the basic data of the counterparty, general ledger account, product etc.

On the other hand, CIT reporting might rely on dedicated accounts in the chart of accounts, additional dimensions to determine cost and revenue nature, or additional ledgers used specifically to record transactions according to CIT regulations. 

For e-invoice reporting settings, objects available in multiple modules, primarily in sales but also purchase and logistics, are utilized for comparison.

Examples of data that are either identical or related include selected elements in different JPK reports. Document numbers, issuance dates, associated sales dates, and amounts of selected document types are shared across various JPK structures. 

A specific case of data dependencies described above concerns derived data from the perspective of ERP systems, such as counterparty information associated with a transaction appearing in different JPK structures. A prime example of such a data set is the data of contractors associated with a specific transaction, such as name, tax identification number, address or accounting account number. These data, appearing on various documents, are reported in different JPK structures, depending on the role of this entity in a given operation. 

Often, depending on the type of JPK structure, information with the same substantive meaning may come from different sources/modules, which may cause them to be inconsistent. Thus, when implementing solutions, it is crucial to analyze not only specific requirements for a single report but also to understand various areas, identify relationships, and implement appropriate logic for the entire set of requirements. A point-by-point analysis often leads to errors.

IT and Business - how to find a common language in tax solution implementations?

The team responsible for business and tax support, in addition to identifying the requirements that need to be addressed in the system, will also have to assist the IT team in the fit-gap analysis and during the actual implementation. Moreover, it should conduct tests of the target configuration and assess the completeness of the prepared solution. On the other hand, the IT team, which usually does not have a complete picture of tax processes, will require constant support from the business. A significant challenge faced by organizations in such situations is the availability of tax and accounting teams, typically engaged in handling ongoing processes.

Understanding business requirements, available system configurations, process settings, and technical capabilities enables enhanced communication and ensures mutual understanding among all project stakeholders.