• Sandor Arany, Senior Manager |
  • Yann David Sutter, Senior Manager |

In our most recent blog post, we delve into the world of indirect tax compliance optimization and discover the transformative potential of SAP DRC technology, offering strategic insights for improving efficiency and compliance in today's evolving digital environment. 

Tax Management in SAP

SAP's tax management solutions enable organizations to efficiently manage compliance, reporting and financial processes, including the handling of complex indirect tax processes and obligations.

SAP DRC in a nutshell

SAP Document and Reporting Compliance is a reporting solution that combines the previous SAP Document Compliance and SAP solutions for Advanced Compliance Reporting in a single product in S/4HANA on-premise and cloud editions. It acts as a single hub for processing electronic business documents (including e-invoices), managing real-time and periodic statutory reports for submission to tax authorities as well as working with ad-hoc internal reports that support your organization’s tax compliance processes. 

In the ever-evolving landscape of international business, compliance with digital reporting requirements across multiple jurisdictions is paramount. E-invoices and electronic tax returns are becoming mandatory in several countries, and demand is likely to increase in the near future.

Organizations therefore find themselves navigating a complex web of country-specific regulations that mandate the digital transmission of reports to respective tax authorities. These submissions may occur in real time, daily, monthly, quarterly or annually, adhering to the formats as stipulated by law. 

The sphere of SAP document and reporting compliance is multifaceted, encompassing various critical areas within the compliance framework. These include Value Added Tax (VAT), withholding tax reports, EC Sales lists, cashflow reports as well as e-invoicing, e-reporting and statutory reporting. While different countries are at various stages in their digitalization journey, this comprehensive approach extends across all regions, aiming to ensure a unified and compliant reporting structure across diverse regulatory landscapes.

SAP DRC process introduction

The introduction of SAP DRC equips businesses with robust tools for document management and reporting, enabling compliance and integrity in financial processes. It eliminates manual reporting, reduces errors and saves time. Additionally, users can create, track and save electronic reports.

SAP DRC: functions and key features

The framework provides the flexibility to support the constantly increasing number of processes required by the different regulators in a consistent way. It provides a set of functionalities that supports the capabilities common to all scenarios, allowing easy integration of country-specific solutions while ensuring standardization in the following areas: 

  • end-to-end processing of electronic documents with SAP document and reporting compliance
  • Consistency checks
  • Configuration and security options for key users
  • Configuring value mappings and accuracy 
  • Configuration for communication with external systems and ease of use

SAP DRC as a solution

As change is constant, it is imperative for any organization to address certain aspects to comply with the demands of the digital age.

  • Automate and standardize operations with a single solution to comply with e-invoicing and other reporting regulations worldwide.
  • Centralize e-document processing and statutory reporting across SAP and third-party solutions. 
  • Respond rapidly to increasingly complex regulations being adopted by countries, and global coverage of end-to-end processes. 

SAP DRC in the desired state

The primary objective of implementing SAP DRC is to help manage complex processes more effectively. This includes end-to-end process support and a unified user experience. Tax authorities gain increased visibility and control, while organizations benefit from a central cockpit to monitor tax reporting and filing statuses. It also helps improve operational efficiency, with a focus on reducing the time organizations and tax authorities send on annual filing compliance and audits.

At the same time, the implementation seeks to minimize human errors and reduce the need for manual intervention through the strategic application of automation technologies. 

This initiative is driven by a commitment to optimize resource utilization, improve overall productivity and mitigate risks associated with manual processes. By deploying SAP DRC, organizations aim to create a more resilient operational framework, paving the way for sustainable efficiency gains and reduced overall maintenance burden. 

How to get started with SAP DRC?

  • Develop a Go-Live strategy. Identify the jurisdictions that may initiate the use of Document and Reporting Compliance initially and later serve as advocates for the solution. 
  • Design your data architecture. Consider the extent of data flowing into SAP Document and Reporting Compliance and define the approach for collecting financial data from various sources.
  • Establish the user support framework. Recognize solution champions and primary contacts for systems integrated with SAP Document and Reporting Compliance. 

Next steps

Consider leveraging expert guidance to analyze the current state, gather requirements, coordinate testing and train users. Whether currently involved in an S/4HANA implementation or post-implementation, expert guidance can play a critical role in ensuring a successful journey.