Income tax depreciation solution

The client’s ERP system (SAP) was not offering the synergies required to manage the complexities of the business and calculate tax depreciation effectively. Certain challenges or problem areas were identified:

• Grouping over 8000 individual assets into the ‘block of assets’ as per the Income Tax Act.
• Summarising the accumulated cost and depreciation of individual assets into the block of assets – the financial team had difficulties reconciling the data to the legacy asset register.
• Gaps in the standard functionality delivered in the India country version of SAP – asset put to use data was not automatically updated as part of the capitalisation process
• Misalignment between individual asset values and values at block level, causing incorrect Written Down Value depreciation calculations.
• No tools set up to assign individual assets to the blocks and or migrate the fixed asset register at the individual asset or block level.

Combining trusted global tax technology experts with ERP services specialists to deliver a first class solution.

In response to the key shortfalls in the client’s current system, our team implemented a series of successful corrective actions:

• Our Tax Technology and ERP Services teams drafted an action plan, worked closely with the client’s finance department to drive a ‘one team’ approach.
• The solution was designed alongside the SAP Product Development team and tested against various business scenarios.
• Customised functionality was implemented to plug gaps identified in the standard SAP solution.
• The approach for reconciling the fixed asset register between the legacy and SAP systems was rectified.
• Efficiencies in the financial year end reporting were increased through developing custom reports to enhance the standard SAP functionalities.
• A tailored training program boosted expertise and knowledge-sharing, whilst the team monitored adoption of the new processes and tools during the first year end period.