Lenovo, Inc. Integrates Transaction Tax Solutions Globally for the New World

Maintaining compliance with cross-border tax requirements and determining sales and use tax, goods and services taxes, and value-added taxes is challenging. Lenovo, one of the world’s largest manufacturers of personal computers, overcame these challenges by automating their processes with ONESOURCE™ Determination. When Lenovo acquired IBM’s personal computing division in 2005, it became a true global business, with strong consumer and emerging market leadership and an efficient supply chain. Today, the company’s sales order and manufacturing processes are distributed around the world, with principal operations in Morrisville, North Carolina, Beijing, Paris, and Singapore, and manufacturing facilities in China, India, Poland, and Mexico. Lenovo’s new global presence means new opportunities for growth, more agile manufacturing, and more complex taxes. The challenge was to streamline and integrate the company’s transaction tax processes with its finance applications on a global basis.

Lenovo uses SAP as its enterprise resource planning (ERP) system, but required a solution to automate the determination, calculation, and recording of U.S. sales and use tax and international VAT. Although SAP can calculate standard tax rates, there were other global tax compliance challenges, such as constantly changing tax rates and rules across multiple countries. “We were looking to extend the tax determination power of SAP,” says Dennis Culin, director of business transformation at Lenovo.

Lenovo selected ONESOURCE Determination, which interfaces with SAP to centralize tax determination and provide a single compliance database for U.S. and international transaction taxes.

“We also wanted to avoid or at least limit human intervention with the tax determination. The user should not have to make a determination on taxability by going through and picking a tax code. We needed a system that would make that determination based on predefined rules established by our tax department.”

Lenovo’s transactional and master data is always interfaced from SAP to ONESOURCE Determination, which means that tax decisions are made by ONESOURCE Determination, but the master data and related mapping tables remain within the ERP system. “We wanted all the source data to be in SAP, and then transmitted over,” explains Culin. “This way, the calculations can be made, stored in the audit database, and then the logistics records are sent back to SAP and stored there.”

The ONESOURCE integration for SAP interface supports tax calls from sales and distribution (SD), materials management (MM), and financial (FI) modules of SAP. “We use generic input and output tax codes that are not rate specific,” says Culin. “We use two tax codes — one for purchases and one for sales — and everything transfers over into ONESOURCE Determination, so we can make sure that the decision is always made there.”