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Companies dealing with complex sales and use tax determination, VAT regulations and other tax challenges across the globe know that SAP alone is not equipped to support the varying requirements from country to country. As SAP sunsets support and updates for ECC and R3, companies must move to HANA to keep their systems up to date. With this inevitable change to S/4HANA or HANA Enterprise Cloud, now is the perfect time to step back and develop a comprehensive strategy to managing tax worldwide.

SAP users must migrate to HANA by 2025, but a majority have not yet started the process. Since the move requires major changes to ERP infrastructure, SAP users with global operations should take advantage of the unique opportunity to be more strategic in their implementation. With the right approach, companies can future-proof their solutions in a way that ensures they can keep pace with constant changes in tax regulations throughout Latin America, Europe and beyond.

As governments increasingly turn to technology for tax enforcement; companies should prepare for the digitization of tax as a core pillar in their HANA implementation strategies.

In the move to HANA, companies must consider the new world of tax, which includes:

  • Constant change management – Companies must be able to anticipate and quickly adapt to major tax reform legislation and smaller rate and field changes while not disrupting operations or risking non-compliance.
  • Internal processes – Compliance often requires changes to basic processes, procedures and technologies employed by global companies. For example, in Latin America, logistics can be impacted by VAT regulations because many countries now require eInvoices to act as a bill of lading, created before products can ship.
  • Required automation – Standardization requirements in Latin American and Europe are designed to quickly identify errors and data discrepancies by eliminating paper-based reports in favor of automated processes. Companies must automate their own operations to avoid errors and audit triggers.

The move to S/4HANA or HANA Enterprise Cloud requires companies to move all of their processes, customizations and third-party add-ons to the new platform. As such, there are several critical considerations.

What to migrate, and when

Since most companies’ SAP ERP systems have been built and customized over many years, many will benefit from a phased approach to HANA implementation. The less customized modules, such as Financial Accounting (FI) and Controlling (CO) will be easier to move than Materials Management (MM) or Sales and Distribution (SD), which will need a long-term plan for customizations.

What to do with customizations and third-party apps

Many SAP configurations have become a patchwork of customized code and bolt-on applications. This is especially true when it comes to sales and use tax determination, eInvoicing, and VAT compliance and reporting, since requirements are vastly different in every jurisdiction a company operates. The move to HANA gives companies the opportunity to consolidate, eliminating local configurations in favor of a global strategy. Companies that proactively plan can help to ensure that the next 15 years are simplified, without the constantly changing configurations needed in the previous 15 years as governments have gone digital.

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