SAP in Special Economic Zones

Special Economic Zones (SEZs) were established in Poland in 1994 to support economic development and attract investors. Currently, 14 SEZs operate across the country. They function under the Act of October 20, 1994, on Special Economic Zones. SEZs mainly attract companies from the manufacturing, logistics, and technology sectors, and their greatest advantage lies in exemptions from corporate income tax (CIT) and personal income tax (PIT). Thanks to SEZs, companies – both domestic and foreign – benefit from preferential business conditions as well as administrative and infrastructural support, contributing to faster development of the regions in which they operate.

Since 2018, the SEZ model has been expanded under the Polish Investment Zone (PIZ) program. This means that tax incentives are no longer limited to the geographical boundaries of the zone; they can now be granted for investments across the country – provided that certain qualitative and quantitative criteria are met. Today, SEZs act as PIZ operators, serving entrepreneurs and helping them secure financial aid for their investments.

For the purposes of this article, we will use the term Special Economic Zone (SEZ); activities outside SEZs are referred to as non-SEZ, or NEZ activities.

In SEZs, tax exemptions are granted based on a zone permit and apply only to income generated from activities covered by that permit. This requires a precise separation of revenues and costs according to PKWiU (Polish Classification of Goods and Services) codes into those related to zone activities and those related to other activities. Appropriate allocation of shared costs is also necessary. Operating within an SEZ requires the proper allocation of costs and revenues and their assignment to accounts in the accounting system to ensure compliance and transparency.

From an efficiency standpoint, automation is the optimal solution, allowing effective use of resources and preventing arbitrary allocations. Automation should cover areas where large volumes of data must be allocated according to objective rules, and checkpoints should enable verification and validation of data accuracy in critical areas. This approach ensures efficiency and maximum protection against the loss of tax relief.

With such a clearly defined goal, a properly configured SAP system, adapted to Polish tax law and supporting the settlement of SEZ tax exemptions, offers an undeniable added value.

The solution package developed by All for One Poland, called the SEZ Management System (SSS), integrates the financial and controlling modules with the sales and distribution modules (FI, CO, SD) and provides access to all information needed to identify SEZ and non-SEZ revenue, assign SEZ, non-SEZ, and shared costs, and settle them correctly.

Our solution can also support the preparation of the required standard audit file (SAF) JPK_CIT data structure (JPK_KR_PD and JPK_ST_KR), which is mandatory as of January 2025.

The solution developed by All for One for SAP systems can support companies operating in SEZs in:

• identifying revenues generated within the zone area,
• recording and allocating costs, including shared costs,
• convenient reporting across individual modules and multiple dimensions, and in the adopted standard,
• generating tax reports compliant with JPK_CIT requirements and regulations regarding transfer pricing documentation.

It should be emphasized that the solution we use in All for One is fully flexible and based to the maximum extent on the objects and tools that the SAP system, whether in the ECC or S/4HANA version, offers as standard. We prepare our clients’ systems so as to avoid the need to develop additional reports. Therefore, preparing special reports for SEZ requirements is an option, not a requirement.

Additionally, we ensure that the entire process is transparent and easy for users to understand at every level and at all times. To this end, we set up the appropriate master data and cost accounting structure to achieve the desired result: a profit and loss statement split into SEZ and non-SEZ (NEZ), in line with the SEZ exemption decision.

When implementing the SEZ Management System in SAP, we can follow two paths: the primary path – during the implementation of a new system, and the secondary path, which, as is easy to guess, is used when adapting an already functioning system.

• In the primary implementation, we can use all available methods do separate SEZ and non-SEZ information. In practice, we create a cost accounting structure that supports P&L reporting split into SEZ and non-SEZ. This path is simpler – like building a house from scratch – nothing needs to be rebuilt;
• In the case of the secondary path, on an existing system, things get a bit more complicated, as with any kind of rebuild. However, this doesn’t necessarily mean that the solution can’t be implemented; rather, it means that the SSS solution may be slightly less “elegant", but still fully functional and performing its role. It will likely involve more compromises compared to the primary implementation. In extreme cases, it may require custom development.

The introduction of the SEZ Management System (SSS) raises the question of its maintenance. After SSS is implemented, users receive a complete set of tools for maintenance and further development. These tools are partially scalable and can be tailored to business needs, offering high flexibility. Customers can choose either a detailed or a simplified maintenance model.

SSS can be maintained independently, as it uses a standard logic and requires no custom programming. Support from All for One is also available. Because no additional ABAP code is used, SSS is resilient to SAP updates and changes. Once implemented on SAP ECC, SSS can be migrated to SAP S/4HANA with ease.

With our comprehensive approach to new SAP implementations, producing profit and loss statements split into SEZ/NEZ is possible at several levels. Existing SAP systems can also be adapted for automated SEZ reporting.

Each case is unique, but based on our many years of experience, we can confirm that process automation is achievable for any cost and revenue accounting setup.

For one of our clients, a packaging manufacturer located in a Special Economic Zone (SEZ) and benefiting from tax exemptions, we are implementing the SAP S/4HANA system with an advanced controlling model designed to meet the needs of a competitive market. From the very beginning, the topic of SEZ/NEZ reporting emerged. Typically, SEZ reporting was limited to individual solutions, ultimately leading to the separation of the profit and loss accounts for SEZ and NEZ activities. This time, however, we decided to take a comprehensive approach to the issue.

We began by properly designing master data structures, such as accounts, cost centers, profit centers (PCs), and segments. We incorporated this master data configuration into all the discussed processes in the controlling, sales, and finance modules, including, of course, the cost accounting process.

The result? The profit and loss statement, split into SEZ and NEZ, can be generated both in CO (Profitability Analysis), on the EC-PCA (Profit Center Accounting) side, and in a calculation-based version in the FI module (in two different ways). Whichever is more convenient for you.