Introducing Object-based Tax

Object-based taxes are similar to form-based taxes but in this case the tax agency has all of the data it needs to make the assessment from another source other than the taxpayer's completed tax return. For example, property taxes are typically assessed based on the taxing authority knowing who owns each parcel of land, what its size is, value is, and more. The tax agency uses that data to issue calculated assessments.

The taxpayer engagement chain for the tax-based object is as follows,

1. Understand: tax authority requires to update their website to explain the tax obligation and requirements so that taxpayer can understand it.
2. Maintain: tax agency requires to maintain the up-to-date tax object information and provide them to taxpayer on demand.
3. Assessment: periodic tax assessment is executed automatically and taxpayer receives the assessment notice.
4. Payment: the taxpayer has many options to pay their tax obligations - SAP provides a payment gateway but the customer can configure any payment gateway to maximize taxpayer's ability to pay.
5. Share: The taxpayer's experience needs to be known and needs to be improved. Qualtrics is the tool that can hear the taxpayer and turn that hearing in information for improvement and analytics.

   SAP provides solutions to help the tax agency anticipate, manage, and recover taxpayer payments.

6. Communicate: If the assessment is not paid, financial customer care and flexible dunning can be used to communicate to the taxpayer their obligation under the tax law and to suggest ways they might complete that obligation. Flexible dunning allows the construction of a taxpayer-specific process that leads to payment. SAP S/4HANA for behavioral insights can detect the likelihood of not being able to pay before that happens and allows the tax agency to communicate early suggesting options for payment.
7. Payment Arrangement: Payment arrangements are supported in the system both for the taxpayer to make promises to pay and for payment plans to be arranged.
8. Enforcement: If finally the taxpayer does not pay then the tax agency can use the enforcement functionality to support the use of legal enforcements such as asset sales or garnishee of wages.

The public authority wants to manage and bill the object-based tax such as vehicle tax on a periodic basis. All required data of calculating the bill due amount are managed by the tax authority and could be sourced from other organization. The business rule engine will be used to calculate the due amount for a specific period of time by using tax object data and create the billing document periodically. The periodic invoice with tax liability will be generated and issued to the customer. The tax authority can also update the data in the tax object due to circumstance change (for example, change of ownership, revised tax rate with retroactive effect) and this will trigger recalculating and adjusting the bill due amount and reissuing the invoice.

The object-based tax is managed in SAP by the following steps:

• Create the contract object with the fact values, which will store all information relevant for tax liability calculation.
• Assign the contract object to the business partner and contract account.
• Use a Business Rule Framework (BRFplus) to create the BRFplus function to module the rule to calculate the tax liability and create a billing document.
• Execute the object-based billing run to create a billing document.
• Execute the invoice run to create the invoicing and PSCD document.
• Execute the print correspondence to issue the invoice to the customer.

The object-based tax adjustment is managed in SAP by the following steps:

• Update the data in the tax object fact table.
• Execute the object-based billing adjustment run to create the adjustment billing document.
• Execute the invoice run to create the invoicing and PSCD document.
• Execute the print correspondence to issue the invoice to the customer if the adjustment amount is the debit amount.