• Chris Downing, Partner |
  • Rizwana Tahiri, Senior Manager |
3 min read

If you have chosen to implement SAP S/4 HANA, the move is a complex undertaking – make sure that you know the risks that come with such a project and leverage all the opportunities that may come with such a project, to help reimagine your tax function.

Tax authorities around the world are going digital. Many now collect tax data at a transactional level, and demand real-time access to information from businesses.

This represents a major shift in the tax compliance model: from self-assessed, post-period returns, to instantaneous, data-driven electronic submissions.

And digital isn’t the only factor reshaping tax. Technological innovation, new ways of working, changing consumer demands, geopolitical uncertainty, disruptive business models: these are all forcing tax functions to rethink how they operate.

Making the case for transformation

Business transformations are underpinned by digital transformation. As such, for the firms who have chosen to have SAP ERP systems, the upcoming move to the S/4HANA business suite is a big and complex undertaking but could be a chance to leverage all the opportunities that may come with such a project to create a tax operating model of the future.

As a tax leader, you’ll no doubt be under pressure to create an agile, futureproof operating model, that can respond to the demands of the digital tax era. If you have chosen to implement SAP S/4HANA, this can be a catalyst to achieve exactly that, by influencing the redesign of your tax and business processes if properly planned and executed. Many of these were built some 20 years ago, as part of the last ERP lifecycle change.  

Deploying SAP S/4HANA is a chance to create a framework that will allow you to:

  • comply with local tax and legal requirements wherever you operate
  • adapt to changing tax regimes and rates
  • manage electronic invoicing and digital reporting requirements
  • exchange documents with tax authorities in real time.

But to make this happen, you must have a seat at the table. That conversation won’t typically involve the tax function.

For SAP users, to avoid ‘having S/4HANA done to you’, you’ll need to make the business case to the board for transforming tax as part of the implementation.

That will mean building a detailed picture of your processes and data points, and of the risks and challenges you face – now and in the future. Gathering as much data as possible will enable an informed assessment of how investing in tax transformation would address these issues.

Key questions to ask while preparing the business case include:

  • Can you quantify the time that’s taken up managing and resolving your tax determination and calculation errors?

  • Do you have an accurate view of the emerging compliance requirements that will affect your function?

  • Is your management and control of tax compliance adequate? If not, could automation help to mitigate the resulting risks, or to reduce the number of penalties you incur?

  • How inefficient are your processes? Do you have a detailed understanding of where problems typically occur? Can you quantify how much time is spent resolving data quality or process issues? How much of that time could a better system free up to focus on strategic priorities?

  • Can you quantify the time spent preparing for audit? Could the process be more effective?

Without this essential groundwork, the transition to SAP S/4HANA is likely to go on around you, with the tax function kept out of the loop. Presenting a clear business case for tax transformation can be the first step in making your operating model fit for the future.

If you have chosen to implement SAP S/4 HANA, please get in touch to find out how KPMG’s experts can help you navigate such a project:

  • Chris Downing
  • Rizwana Tahiri