Why SAP Add-ons Outperform Tax Engines for VAT Determination
Faster implementation, lower total cost of ownership, and simplified maintenance
Why SAP Add-ons Outperform Tax Engines for VAT Determination
When it comes to VAT determination, accuracy and compliance are critical. Businesses running SAP often face a choice:
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Implement an SAP-certified Add-on that integrates natively into the ERP
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Connect to an external tax engine via integration
While both approaches can deliver VAT functionality, the SAP Add-on route consistently proves more cost-effective and time-efficient — both at go-live and over the long term. Crucially, an SAP Add-on is built specifically for SAP, meaning it is optimised for its data structures, processes, and workflows without having to compromise for compatibility with multiple ERP systems — a limitation that tax engines often face.
Faster Implementation, Less Disruption
Native Integration Without Middleware Complexity
An SAP Add-on operates entirely within your existing SAP environment. This eliminates the need for complex middleware layers, custom connectors, or extensive mapping required to connect to a tax engine.
- Result: Implementation timelines are significantly shorter and require less technical expertise as the system sits entirely within your SAP environment.
- Impact: Reduced downtime, fewer project resources, and faster time-to-value.
Purpose-Built for SAP
Because the Add-on is engineered exclusively for SAP, it works seamlessly with SAP’s tax codes, document flows, and master data. There is no need for duplication of master data or commodity code mapping for an Add-on. Unlike tax engines, which must be designed to work across multiple ERP platforms, the Add-on can focus entirely on optimising performance, accuracy, and stability within SAP.
Lower Total Cost of Ownership (TCO)
1. Reduced Development and Integration Costs
Tax engines require custom integration, error handling, and security configuration. These costs can be significant and continue after go-live.
• SAP Add-ons leverage existing infrastructure, reducing the need for bespoke coding.
2. No Ongoing Transaction Fees
Many tax engines charge per transaction or API call. Over time, these fees can surpass the initial software cost. Add-ons operate within your SAP instance which avoids expenses external connectors.
3. Lower Support Overheads
With an Add-on, the tax team can manage the Add-on and make changes themselves, reducing or eliminating the need for dedicated internal resources to support the system.
Easier Maintenance and Future-Proofing
1. Single Point of Upgrade
When SAP is upgraded, an Add-on is updated alongside it — often by the same vendor who certified it. With a tax engine, you must coordinate between SAP upgrades and the engine provider’s compatibility updates, which can cause delays or downtime.
2. Simplified Troubleshooting
In an Add-on scenario, all VAT logic and data reside within SAP. This means:
• No chasing issues across multiple systems
• No vendor coordination delays
• Faster resolution of tax determination errors
3. Seamless Compliance Updates
VAT rules change frequently. Add-on vendors push updates directly into SAP, ensuring compliance without the need for re-integration or changes to tax engine schemas.
Schlussfolgerung
While tax engines can work, they introduce additional complexity, cost, and risk. In a function as critical as VAT determination, the most efficient, reliable, and cost-effective choice is to keep it within SAP — and to use a solution built specifically for SAP systems.
For companies running SAP, an Add-on for VAT determination offers:
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Faster, smoother implementation with minimal disruption
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Lower and more predictable costs over the solution’s lifecycle
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Simplified maintenance with fewer moving parts and dependencies
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Optimisation for SAP without the compromises of multi-platform tax engines
Talk to us if you have further questions on SAP Add-ons verses Tax Engines