CG SAP FATCA 101 Configuration Guide

SAP Tax Classification and Reporting for FATCA 1.0, SP01: Configuration Guide © Copyright 2013 SAP AG. All rights reserved.

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SAP Tax Classification and Reporting for FATCA 1.0, SP01 Configuration Guide

PUBLIC Document Version: June 2013


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Copyright © Copyright 2013 SAP AG. All rights reserved. SAP Library document classification: PUBLIC No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice. Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors. National product specifications may vary. These materials are provided by SAP AG and its affiliated companies (“SAP Group”) for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty. SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries. Please see http://www.sap.com/corporate-en/legal/copyright/index.epx#trademark for additional trademark information and notices.

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Table of Contents SAP Tax Classification and Reporting for FATCA: Configuration ........................................... 5

1 Create Custom Indicia Checks ........................................................................................ 6 2 Set up Different Event-Based Workflows for Different Purposes ...................................... 8 3 Avoid Duplicate Settings in Event Handling ................................................................... 10 4 Configure to Include Account Systems .......................................................................... 11 5 Set Up Organizations .................................................................................................... 13 6 Assign Indicia Checks to Relationships ......................................................................... 15 7 Assign Indicia Checks to Roles ..................................................................................... 18 8 Configure Balance Checks on Related Business Partners ............................................. 20 9 Configure Complex Classifications ................................................................................ 22 10 Configure Reporting Files via Data Medium Exchange Engine .................................... 27


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SAP Tax Classification and Reporting for FATCA: Configuration This document provides a wide range of configuration and Customizing topics for the SAP Tax Classification and Reporting for FATCA solution.


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1 Create Custom Indicia Checks You can integrate custom checks into the tax classification process in addition to the checks delivered by SAP. A custom check may be used to evaluate data not covered by the SAP checks, such as custom fields in SAP Business Partner, or any external data.

Prerequisites You have understood the BAdI concept and implementation of an existing enhancement spot.

Consider the type of check that you want to set up, which can be as follows:

· Is it a basic check with a simple yes or no as result? If so, the result of the check is also either positive or negative. You may take the address check delivered by SAP as an example for this check.

· Is it a check which would arrive at a decision? If so, you may refer to the check provided by SAP as a template to read documents.

· Is it only a part of a complex interaction of different checks? If so, you may need to also create a consolidation to evaluate the result of the integrated checks. For a detailed description on consolidations, see Set up Different Event-Based Workflows for Different Purposes [Page 8], the following chapter in the configuration guide.

Procedure The following steps are required to set up a new indicia check:

1. Create a BAdI implementation for the check in Customizing by choosing Tax Classification and Reporting for FATCA Settings for Tax Classification Classification Framework Business Add-Ins (BAdIs) BAdI: Indicia Check .

o Also assign a filter value. You can create a new entry for the filter value in the table /FATCA/BADI_ICHK.

o Implement the BAdI in the implementation class that you created.

2. Make the new check known to the system in Customizing under Define Indicia Checks. Give the check a unique ID, assign the filter value of the BAdI and provide a short description. Also assign an entry type that is used to control logging. In the check implementation, you should use this entry type to log check results.

You can define the logging for the entry type in Customizing under Assign Priority to Log Entries and Set Log Details.

3. Assign the new check to the check set in which you need the check. You can do this in Customizing under Maintain Indicia Check Sets.

4. Make the following check-specific settings in the rule sets that the check set is assigned to, in Customizing by choosing Maintain Rule Sets -> Set Check Details:

o If the check uses business partner addresses, assign an Address Type Set.

o If the check uses business partner identifications, assign an ID Type Set.

o If the check is positive, assign a document set to state the documents the customer has to provide.


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o If the check result should not directly influence the check set result, but only be evaluated by other means such as consolidations, set the Ignore Result checkbox.

5. Mark the new check in all the events for which the check is also executed. You can define this behavior in Customizing under Define Event Handling.

Result The check is executed with the related check sets.


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2 Set up Different Event-Based Workflows for Different Purposes You usually use workflows to inform the users about the need for manual activities in the classification of a business partner. In this context, it makes sense to implement different workflows for different purposes.

· A workflow is triggered if an individual was classified as relevant based on electronic indicia checks, where next step is to ask customer for documentary evidence.

· A workflow is triggered if an entity was classified as NFFE based on an industry code, but the system cannot find out about any U.S. Controlling Persons. Then, you can arrive at the final classification by clarifying if there are any U.S. Controlling Persons.

As the workflow trigger delivered by SAP offers only one event, other means are required to select different workflows.

Prerequisites o You have set up different workflows according to your needs.

o You want the workflows to be triggered using the event.

Procedure You can use any of the following procedures:

Trigger Conditions Based on Event Data Here, you work with the event delivered by SAP. To trigger different workflows, you create a function module which evaluates all parameters contained in the triggering event. With that, you can choose different workflows based on parameters like Tax Compliance Status and Reason. You can perform the steps as follows:

1. Use transaction SWETYPV to assign the workflow you want to trigger to the default event SAP_DEFAULT from class: /FATCA/CL_FW_ACTVT_TRIGGER.

2. Define a Receiver Type function module in details by pressing Ctrl + Shift + F2.

3. Implement the function module, defining the individual logic to get to workflow IDs.

4. In configuration, always choose SAP_DEFAULT as parameter.

The limitations while using this procedure are as follows:

· You need to choose a workflow based on existing parameters

· It is not possible to define the workflow to choose using a configuration, assigning different events


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Create New Event Using this procedure, you can define new events with the following steps:

1. Create a subclass for the class, /FATCA/CL_FW_ACTVT_TRIGGER.

2. In the subclass, create all the events that you may want.

3. Using transaction SWETYPV, create an entry for every event and assign the workflow of interest.

The advantages of using this procedure are as follows:

· Using different events, assign the workflow of interest in configuration

· No selection logic to implement


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3 Avoid Duplicate Settings in Event Handling In the configuration for event handling, you define the checks the solution should execute for the different events the solution offers.

Such configuration may lead to the demand for the execution of the same checks for different events. This requires that you make the same settings for each of the events concerned.

You can save effort by re-shaping the events.

Prerequisites You have classified the internal events for which you want the same event handling. Internal events are non-changeable and delivered by SAP.

Procedure 1. Define a new event (name it for example, collective event) which is then used to

assign all the checks you want for the internal events concerned.

2. In Customizing under Define Events, create a new entry in the assignment for every internal event for which you want the same behavior. For all entries, choose the same event name and assign one of the internal events concerned.

3. Define the event handling for the collective event in Customizing under Define Event Handling. Execute all the configuration steps that are required.


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4 Configure to Include Account Systems You can use this configuration to include an account system into the tax classification and reporting processes. Account systems are relevant for the following:

· Indicia checks in tax classification

· Balance checks in tax classification

· Retrieval of balances and other key figures in reporting

By creating a new application, you can integrate a new account system, after which the application is updated with the system.

Prerequisites · You have installed the SAP Tax Classification and Reporting for FATCA solution on

the account system to integrate or

· You have established an RFC connection to access the account system.

Procedure Configure the new application by performing the following steps in Customizing by choosing

Tax Classification and Reporting for FATCA General Settings Account Settings :

1. Define the application in Customizing by choosing Define Applications.

You create a new entry with an ID for the application. You can also enter the following based on your requirements:

o If you want to access your account system via remote connection, enter the RFC connection.

o Name the BAdI that is used to implement access to the account system. If your account system is a BCA, CML or DM system, choose one of the SAP delivered BAdIs. For custom systems, enter the filter value of the created BAdI for your system.

o Name the BAdI that is used to implement the mapping of business partner IDs from your business partner (BP) system on the account system. This is only required if a business partner has different IDs in the business partner and the account system.

SAP does not deliver a BAdI implementation for the BP mapping. Therefore, you should create your own and enter the filter value.

o Set a package size for parallel processing. Only the reporting part of the solution takes this value into account.

2. Define a 'role set' for the application under Define Applications Define Role Sets .

A role set groups all roles that a BP takes in an account in order to have the system include the account into the BP classification.


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o Set the Standard Set indicator, which updates the system to consider roles of this set in tax classification.

o Assign all relevant roles in Customizing by choosing Assign Roles.

3. Define a group of products under Define Applications Define Account Groups

The system only considers the accounts of the products defined here. The Product field may contain any term that identifies different types of products in your account system.

o Set the Standard Set indicator, which updates the system that it automatically includes accounts with the products of the set.

o Enter all the relevant products.

4. Integrate the account system into the system under Define Applications Map Key Figure on Flow Types or Transaction Types .

This maps the flow types that the account system knows to key figures that are known to the solution. This step is required for the reporting part of the solution, where certain pre-defined key figures, such as Interest or Dividends should be reported. The mapping defines the flows that contribute to each key figure.

5. In Customizing, choose Assign Applications to Tax Classification Variants to assign the application to the tax classification variants that are used.

This makes the application known to the system.

o Define the mapping of the products of account system on account types under Assign Applications to Tax Classification Variants Map External Product to Account Types . This enables the solution to know the accounts that should be considered in balance checks that depend on thresholds for specific account types.

Result The account system is ready for use by the solution.


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5 Set Up Organizations You are now aware about the tax classification variants defining the rules of tax classification and reporting via Rule Sets and other Customizing settings. A tax classification variant should cover a certain set of regulations, like FATCA in a bilateral agreement (IGA) or FATCA for banks where the jurisdiction is not in a bilateral agreement.

In global banks, different branches of the bank should do tax classification and reporting adhering to different regulations. SAP Tax Classification and Reporting for FATCA supports such scenarios via tax classification variants for each set of regulations and assigning each tax classification variant to the organizational units to which the rules are applied.

You set up your organizational units by defining institutions and assigning the institutions to tax classification variants.

Prerequisites · You have made a note of the individual regulations that your branches should adhere

to. You have listed all the branches adhering to a certain set of regulations, combined with the organizational unit chosen to identify the branch in each of your account systems.

· You have created a tax classification variant for each set of regulations.

Procedure Make the following organization settings in Customizing by choosing Tax Classification and Reporting for FATCA General Settings Organization Settings :

1. Define the institutions in Customizing by choosing Define Institutions.

You can configure institutions as you require for example:

o One institution for all branches that adhere to a certain set of regulations.

o One institution per country.

o Several institutions per country, reflecting organizational units.

o One institution per bank number.

2. Map the existing organizational units to the institutions by choosing Map Institutions on Application-Specific Organization Structure.

The assignment is dependent on applications. For each application, define external IDs of financial institutions that belong to an institution. The external ID of financial institution is a generic term, where you may enter any organizational term that fits your requirements and is used in the account systems that are referred to by the application. The BAdI for account system performs the mapping of external IDs to institutions. For the account systems natively supported by the software, the mapping assumes the following:

o External ID is a bank area for BCA systems.

o External ID is a company code for CML systems.

o External ID is a bank area for DM systems.


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If you want the solution to map differently, copy any of the delivered BAdIs and adjust accordingly. For custom account systems, implement the mapping that meets your requirements.

3. Map the institutions to the tax classification variants by choosing Assign Institutions to Tax Classification Variant.

Result The system only considers accounts that belong to the institutions assigned to the tax classification variant for which classification and reporting are done.


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6 Assign Indicia Checks to Relationships Classifying business partners may require execution of indicia checks on related business partners (BP). In this context, the related business partners are those that share a business partner relationship with the business partner in classification.

For organizations, check if any controlling person is a U.S. citizen. This is required in order to find U.S. controlling persons for passive NFFEs as part of the classification for entities.

Prerequisites · You have maintained a business partner relationship for the related business

partners.

· If an evaluation of shareholder ratios is required, a percentage is maintained in 'Participation Data' of the relationship.

Procedure You use this procedure to configure the relationship handling for each relationship category of interest. First, check what relationship categories the solution should evaluate on what type of business partner during classification.

For each relationship category of interest, proceed as follows:

1. Select the relationship set for the business partner type, for which you want relationship handling in Customizing by choosing Tax Classification and Reporting for FATCA Settings for Tax Classification Settings for Checks Relationship Handling Define Relationship Sets for Indicia Checks .

You cannot see which relationship set is chosen for which business partner type within one Customizing. This assignment is set up via assigning a relationship set to a rule set which is then assigned to a business partner type. For this configuration, the Customizing activities are as follows:

o Assign the relationship set to a rule set in Customizing by choosing Define Relationship Sets for Indicia Checks.

o Assign the rule set to a tax classification variant for a certain BP type in Customizing by choosing Tax Classification and Reporting for FATCA Settings for Tax Classification Classification Framework Rule Sets Assign Rule Sets to Tax Classification Variant .

Therefore, through the rule set a relationship is directly connected to one or more business partner types.

2. Create an entry for your relationship category for the selected relationship set in Customizing by choosing Define Relationship Sets for Indicia Checks Assign Indicia Checks to Relationships .


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For example, BURC01 for a shareholder relationship.

3. Define the business partner – business partner 1 or business partner 2 – in the relationship that you want the solution to execute the check, in Customizing by choosing Define Relationship Sets for Indicia Checks Assign Indicia Checks to Relationships .

Set the Incl. BP1 indicator for business partner 1 and Incl. BP2 indicator for business partner 2, or set both the indicators. You can find the meaning of BP1 and BP2 in the specific backdated posting relationship based on the corresponding description.

In shareholder relationship, BP1 is the shareholder ('Is Shareholder Of'), and BP2 is the organization ('Has Shareholder'). If you set the indicator for BP2, it indicates that you want the system to execute a check on the shareholder of the organization to classify.

4. Enter the ID of an indicia check in Customizing by choosing Assign Indicia Checks to Relationships.

For a business partner in classification, the system executes this check on any related business partner of relevance, which happens according to the set parameters. For example, set 'US CITIZEN' for a check on U.S. Citizenship.

5. Define a percentage, if relevant, in Customizing by choosing Assign Indicia Checks to Relationships.

The percentage is used to exclude business partners in a given relationship category from an indicia check, if the participation is below percentage. The percentage is evaluated both for direct and for indirect participations. In the second case, a multiplication of every percentage is performed, and the system compares the overall ratio with the percentage.

o Enter 25%. If BP A is shareholder of BP B with percentage '20%, the indicia check defined is not executed on BP A.

o Enter 25%. If BP A is shareholder of BP B with 50%, and BP B is shareholder of BP C with 10%, BP A is indirect shareholder of BP C with 5%. As 5% is below 25%, the indicia check defined is not executed on BP A if BP C is in classification.

6. Maintain an entry for each check to consider, if you want the system to execute different checks for the same relationship category, in Customizing by choosing Assign Indicia Checks to Relationships.

Result The system executes an indicia check on a related BP when all the defined parameters match.


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· An entry for relationship category BURC01 is maintained. You set the Incl. BP2 indicator, which means that the check is executed for business partners that have a shareholder. You set participation to 25% and entered check 'US Citizen'.

· If the system finds a BP according to these settings, it checks U.S. Citizenship for this BP. If found, the relationship check ends with a 'positive' result, which means an indicia check had a 'positive' result.


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7 Assign Indicia Checks to Roles The purpose of this configuration is similar to the configuration of an indicia check for a certain business partner relationship. When classifying a business partner (BP), the system executes indicia checks on related business partners. In this context, related business partners are those assigned to an account in a certain role, where the account is held by the business partner in classification. You define for which roles an automated check should be triggered.

For example, for individuals, check the accounts of an individual if a BP assigned with power of attorney has a U.S. address.

Prerequisites The tax classification process can access all accounts to be included in such checks. This includes the following:

· You have done the configuration for all account systems of relevance in settings for applications.

· Account systems are physically available, and an RFC connection is defined, if necessary.

· Accounts that a business partner holds can be found by the tax classification process via corresponding BAdIs checking for BP accounts.

· Further, for account-related checks, business partners are assigned in the roles of interest.

Procedure You use this procedure to configure the relationship handling for each role of interest. First, check what roles the solution has to evaluate on what type of business partner during classification.

For each role of interest, proceed as follows:

1. Choose the relationship set for the business partner type, for which you want the relationship handling, in Customizing by choosing Tax Classification and Reporting for FATCA Settings for Tax Classification Settings for Checks Relationship Handling Define Relationship Sets for Indicia Checks .


o Assign the relationship set to a rule set in Customizing by choosing Define Relationship Sets for Indicia Checks.


Therefore, through the rule set, a relationship is directly connected to one or more business partner types.


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2. Create an entry for your relationship category, for the selected relationship set, in Customizing by choosing Define Relationship Sets for Indicia Checks Assign Indicia Checks to Roles . For example, BKK020 for an authorized drawer.

3. Enter the ID of an indicia check in Customizing by choosing Assign Indicia Checks to Roles.

For a business partner in classification, the system executes this check on any related business partner of relevance according to the set parameters. For example, set 'US ADDRESS' for a check on U.S. Address.

4. Maintain an entry for each check, if you want the system to execute different checks for the same role, in Customizing by choosing Assign Indicia Checks to Roles.

Result The system executes an indicia check on a related BP, when all the defined parameters match.

· You maintained an entry for role BKK020, assigning the check on a 'U.S. Address'.

· When the system finds a BP for the maintained role in any of the accounts of a BP in classification, it executes a check on U.S. Address for the BP in role BKK020. If found, the relationship check ends with a 'positive' result, which means an indicia check has a 'positive' result.


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8 Configure Balance Checks on Related Business Partners Classifying business partners may require including accounts of related business partners into the calculation of a business partners balance. In this context, related business partners are those which share a business partner relationship with the business partner in classification.

For individuals, include mutually held accounts, for example, accounts held by a business partner of type group which represents the marriage. This is required because a mutually held account contributes with their full balance to the balance of each account holder.

Prerequisites You have maintained a business partner relationship for the related business partners.

Procedure You use this procedure to configure the relationship handling for each relationship category of interest. First, check what relationship categories the solution has to evaluate on what type of business partner during classification.

For each relationship category of interest, proceed as follows:

1. Choose the relationship set for the business partner type, for which you want the relationship handling, in Customizing by choosing Tax Classification and Reporting for FATCA Settings for Tax Classification Settings for Checks Relationship Handling Define Relationship Sets for Balance Checks .


o Assign the relationship set to a rule set in Customizing by choosing Define Relationship Sets for Balance Checks.


Therefore, through the rule set, a relationship is directly connected to one or more business partner types.

2. Create an entry for your relationship category for the selected relationship set, in Customizing by choosing Define Relationship Sets for Balance Checks Set Relevant Relationships . For example, BUR024 for a marriage.


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3. Define the business partner – business partner 1 or business partner 2 – in the relationship you want the solution to execute the check in Customizing by choosing Set Relevant Relationships.

Set the Incl. BP1 indicator for business partner 1 and Incl. BP2 indicator for business partner 2, or set both the indicators. You can find the meaning of BP1 and BP2 in the specific backdated posting relationship based on the corresponding description.

In a marriage, BP1 is the group representing the marriage ('Has Partner in Marriage Partnership') and BP2 is a marriage partner ('Belongs to Marriage Partnership'). If you set the indicator for BP2, it indicates that you want the system to include accounts of the marriage group into balance check of the marriage partner.

Result The system includes accounts of related business partners in balance checks if all the defined parameters match.

You maintained an entry for relationship category BUR024. You set the Incl. BP2 indicator for, which means that the accounts of the marriage group are included in the balance check for a marriage partner. If the system finds accounts held by the marriage group, the balances of the accounts are included in calculation of balance of a marriage partner.


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9 Configure Complex Classifications Some classifications are rather simple and straightforward – for example, for individuals with a clear set of checks and a simple evaluation of check results. Here, if any of the indicia checks is positive, we assume the business partner is relevant. At least until the opposite is proven.

In contrast, other classifications can be quite complex and difficult to set up. The classification of entities does often fall into the category of complex classifications. The solution supports you with a pre-defined set of checks and corresponding configuration for the classification of entities. However, taking heterogeneous system landscapes into account, and considering that some aspects of an entity classification cannot be pre-configured, adjustments and enhancements should be done.

This configuration describes the approach toward setting up complex classifications, which is illustrated in the following figure. Basis is the delivered configuration for entities, where only indicia checks are considered.

Is Non-U.S. Entity an FI?

Is Entity a Passive NFFE with U.S. Controlling Person?

Is Entity a Specified U.S. Person?

Proof:No U.S. Specific

Person

U.S. Indicia Found

Documented U.S.

U.S. Reportable Account

No

No

Yes Yes

Yes

NoIs Entity an FI

No

No U.S. Reportable Account

Is Passive NFEE

Has Controlling Persons

CP is U.S. Citizen or Resident

U.S. Reportable Account

Yes

Yes

Yes

Yes

No

No

No

S_READ_DOC

Manual

U.S. Indicia Checks on Entity:S_ADDRESS

S_PLACE_INCORP

S_RELATIONSHIP with S_CITIZEN

Is FI a Non-Participating FFI, Subject to Aggregated Reporting?

Entity is [FP] FI or Partn. Jurisd.

FI

Participating FFI

FATCA ID verified on IRS

FFI list

No Reporting

No

Yes

Yes

Certified Deemed-

Compliant FFI

Exempt Beneficial Owner Excepted FFI

Non-part. FI, Reportable Art. 4

§ 1b

No No

NoRegisteredDeemed-Compliant

FFI

Yes

Non-part. FI as of Art. 11

§ 2

No Reporting

No

Yes

Yes

No

No

Yes Yes

Yes

No

S_ADDRESS

Manual

S_CHK_FFI

Manual

S_CHK_FFI

Manual

S_IND_CODE

Manual

Configuration of a Complex Classification

The objective of this configuration is to classify entities. To do this, start by asking the following questions:

· Is the entity a specified U.S. Person?

· Is the entity a Passive NFFE with U.S. Controlling Person?

· Is the entity a non-participating FFI subject to reporting?

If any of the questions can be answered with 'Yes', then the entity is relevant for reporting and is thus classified as relevant. A combination of checks and the correct evaluation of the checks give the answers to the questions. Different combinations of the checks can lead to not relevant as result, which a complex classification should consider as well.

Prerequisites You have clarified what check to execute for a certain classification scenario. You have made sure that all checks have a corresponding BAdI implementation. You have completed the basic configuration for the checks and have added them to indicia sets and the indicia sets to a rule set.


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Procedure 1. Make the basic settings of checks in their corresponding rule set.

1. Set the address type set for all checks accessing BP address data in Customizing by choosing Tax Classification and Reporting for FATCA Settings for Tax Classification Settings for Checks Settings for Business Partner Data Define Address Type Sets .

The checks will only access addresses maintained in the corresponding address type set. For example, Address Type Set S_ENTITY for checks S_ADDRESS, S_CITIZEN or S_RELATIONSHIP.

2. Set whether the check checks on partner jurisdiction country codes.

Usually, checks look for country codes that are not flagged as partner jurisdictions. If a check related to country codes finds any of the standard country codes maintained in Customizing by choosing Settings for Tax Classification Set Country Codes , has a positive result. If the Partner Jurisdiction indicator is set, a check has a positive result if a country marked as partner jurisdiction is found.

§ S_ADDRESS does not have the indicator set, so the check looks for standard country codes (which is just U.S. in the business content)

§ S_ADDRESS_FP has the indicator set, which means it checks for all country codes set accordingly in Customizing by choosing Set Country Codes, like DE or FR.

3. Set the ID type set for checks accessing ID data in Customizing by choosing Settings for Checks Settings for Business Partner Data Define ID Type

Sets . For example: ID Type Set S_ENTITY for check S_CIZITEN.

4. Assign a document set in Customizing by choosing Settings for Tax Classification User Interaction Documents Define Document Sets Assign Documents .

If a check has a positive result, the solution informs the user about the related documents to request from the customer.

5. Maintain the setting in Customizing by choosing Settings for Tax Classification Classification Framework Rule Sets Maintain Rule Sets to ignore the results of the check.

Typically, for simple checks, you have not selected this setting. Then, a check result is considered to find a check set result. For example, if any check has a positive result but none with decision, the check set results are positive as well. If you want to execute checks to have the results available in follow-up steps, but you do not want the checks to influence a check set result, set it to 'Ignore Results'. The typical cases for this setting are as follows:

§ A positive check alone does not lead to a clear check set or result. The best examples for this are entities for which the combination of several checks makes up a check set result.


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For example, the combination of almost all checks in classification of entities where consolidations have to find an overall result.

6. Make sure that the indicia check for consolidations is contained in your rule set.

This requires defining an indicia check with the BAdI Implementation SUMMARIZE in Customizing by choosing Settings for Tax Classification Classification Framework Checks and Check Sets Define Indicia Checks

, and assigning the check to your check set of relevance by choosing Checks and Check Sets Maintain Indicia Check Sets .

2. Set up consolidations

This is the second step in a complex classification. A consolidation is a special indicia check. It makes use of the results of any of the checks executed before, consolidating these results into a common result in Customizing by choosing Settings for Tax Classification Settings for Checks Decision-Making Checks Define Consolidation Checks . The common result is put into a decision. For entities, we make use of consolidations to answer the questions listed as follows (also mentioned earlier):

1. Is the entity a specified U.S. person?

§ The answer is 'Yes' if we find documentary evidence.

The corresponding check is S_READ_DOC, which maps documents on decisions, if successful. The consolidation S_SPEC_US is set up accordingly: if the evaluation of available documents lead to either S_R_W9 (generic result) or S_R_SPECUS (already specific result), the consolidation result is S_R_SPECUS (relevant, U.S. Specified Person). Therefore, the consolidation only works on decisions made before and is just used to map from a previous decision onto a new decision. With that, it falls into the category – 'Consolidation of Decisions'.

§ The answer is 'maybe Yes' if any check on U.S. Indicia was positive, and none of the other checks that come to a clearer result were successful.

The consolidations (we need two) coming to decision S_P_SPECUS (probably specified U.S.) are set up accordingly, just based on check results as follows:

§ If S_ADDRESS or S_PLACE_INCORP is positive, it means that any indicium of relevance was positive. But we only consider that as important, if both S_IND_CODE and S_READ_DOC are negative, which means a check that has a clearer result was not successful.

§ As all the assigned results of a consolidation should fit, we need two consolidations: S_P_SPECUS for address found andS_P_SPECU1 for place of incorporation found.

The consolidations basing on check results or attributes or both, previously set fall into the category 'Consolidation of Checks and Attributes'. Most consolidations are of that kind.

2. Is the entity a passive NFFE with a U.S. controlling person?


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§ The answer is 'Yes' if the entity is a passive NFFE and has a controlling person who is U.S. citizen.

§ Therefore, following are the checks that involve and contribute to the consolidation:

§ S_IND_CODE to get to know the type of entity (Passive NFFE); S_IND_CODE should set attribute CL_EN if successful, on which the consolidation relies (checking for value PA_NFFE).

§ S_RELATIONSHIP to find controlling persons and to check controlling persons on U.S. Citizenship via S_CITIZEN on identified shareholders; S_RELATIONSHIP sets an attribute BPREL with value US_CP if successful, on which the consolidation relies.

It is necessary to set up relationship handling accordingly, as done for entities in relationship set S_IND_ENT_IGA.

3. Is the entity a non-participating FFI subject to reporting?

§ The answer is 'Yes' if the entity is an FFI, and is not exempted based on different options.

§ Consolidation S_NONP_FFI works accordingly as follows:

§ S_IND_CODE checks for FI; it set CL_EN to NPFFI if relevant.

§ S_ADDRESS_FP checks if the entity is located in a partner jurisdiction; it is positive when successful.

§ A custom check (S_CHK_FFI, not yet included) should check the IRS list for FFIs to find the FFI status. This should be enhanced once available and is not yet contained in the consolidation.

3. Apart from these settings, we also should consider setting up consolidations for other outcomes of the indicia checks.

1. S_ENT_NON

A consolidation for the case that documentary evidence is given stating non-relevance via W-9:

§ S_ENT_NON bases on decisions found before (for example, via document handling) that are S_NOT_REL or S_NR_W9 (not relevant based on W-9).

2. S_ANFFE


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A consolidation for an active NFFE, also stating non-relevance: S_ANFFE bases on attribute CL_EN with value AC_NFFE, assuming a check on industry code identified the active NFFE.

3. S_FFI_OTH

A consolidation to define FFIs as not relevant that applies to, for example, certified deemed-compliant FFIs, exempted FFIs, or exempt beneficial owners. This consolidation evaluates corresponding attributes, assuming that a custom check S_CHK_FFI provides us with the results.

4. S_FP_FI

A consolidation to define a FATCA Partner FI that is not relevant. This consolidation is special as it combines check results and attributes: if S_ADDRESS_FP, the check on partner jurisdiction, is successful and some check (probably S_IND_CODE) sets the attribute CL_EN to FI, then we know the entity is a FATCA Partner FI.

You can enhance the configuration for custom requirements according to the principles listed before, as follows:

· Create custom indicia checks if necessary. Add the checks to your indicia sets and those to your rule sets of relevance. Configure these according to your requirements.

· Create new consolidations to handle complex scenarios or adapt existing consolidations. It is very essential to integrate a check for reading the published FFI list from IRS.

Result A complex classification, which usually is an interaction of the individual indicia checks and a consolidation check, with different consolidations, is set up


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10 Configure Reporting Files via Data Medium Exchange Engine With the Data Medium Exchange Engine (DMEE), you can create and modify XML trees that are used for the generation of Reporting files.

Procedure 1. Execute the DMEE1 transaction to access the initial screen of the DMEE. An example

format tree is provided by SAP which is S_FATCA. On the initial screen, you can display the format tree, to change it or to create another format tree.

2. If you want to create a new tree to be used for the Reporting file, always use ZCD1 Tree Type. This ensures that all necessary attributes and key figures are available for the format tree.

3. The information that must be reported to the IRS or local authorities should be defined by nodes.

o To insert the first node, select the root node and enter the required value or select the root node, right click, and select the node you want to create.

o To insert successive nodes, always select a node above the node that you want to insert. You can then specify whether the node is to be inserted on the same level or as a subnode. When you insert a node, double click the node. If you only highlight it with a single click, the details of another node are displayed as the system still recognizes this as the previous node.

4. Depending on the type of node you create, you can maintain other data in the detailed view to the right of the format tree. You can view all the entries that are available for the individual fields.

5. After the node is inserted, the system automatically displays the detailed view for an element on the right side. This includes the following tab pages: Attributes, Source, Conditions, and Aggregation:

o On the Attributes tab page, it is important to maintain a name, the length and type of the element, the repetition level, and the mapping procedure. If the node should contain data, choose ‘Structure field’ as the mapping procedure.

o On the Source tab page, you can maintain the mapping. Select one of the available structures delivered by SAP and field names.

6. If you double-click on the first element of the format tree, you can set the overall tree properties. On the right frame, you can see the tab pages Administrative data, Format attributes, Levels, Sort/key fields, and File data. The important tab pages are Levels, which represents a certain repetition factor of an element and the Sort/key fields, which determine the sequence in which the nodes occur in the final Reporting file.

Result You have understood the key function of the DMEE, which is used to create and modify format trees for generating Reporting files. For more information, see Customizing Payment Methods for Use with DMEE under http://help.sap.com/erp Application Help English SAP ERP Central Component Accounting Financial Accounting (FI) Accounts Payable (FI-AP) FI Accounts Receivable and Accounts Payable Payments Executing the Payment Program Payment Medium Workbench Data Medium Exchange Engine Outgoing File .

http://help.sap.com/erp