Migrating a business system onto SAP HANA is no small feat in itself. Several things need to be addressed before the company’s data is safely and securely updated on the cloud and can be accessed from all required personnel. However, for SAP shops, the situation can be a lot more complicated because of the hidden problem of tax compliance. Taxation is a necessary evil around the world, and businesses need to comply with local regulations, or else they risk being hit with excessive fines as well as the label of being a tax evader or fraudster. There is no single standard way that countries deal with taxes, and they change by region and even by time. As more and more states move into utilizing technology, electronic invoicing and tax compliance becomes an even more substantial hurdle for businesses to jump over. Luckily, with the inclusion of SAP Central Finance combined with Sovos S1, a way to avoid getting tripped up by hidden tax traps exists for SAP shops.
Sovos S1 and SAP Central Finance
It’s understood that when a company starts shifting its operations into SAP HANA that the transformation is likely to take a few years for all the relevant data to make its way onto the cloud. The new data can be entered directly into the system, but the slow transition of old data can wreak havoc with tax compliance. The SAP Central Finance module was created to ensure that all transactions and data regarding sales and purchases are available in a single location. Many companies manage their taxes through SAP, but moving this operation online requires making tax compliance a central point of that migration. While Central Finance is brilliant at consolidating finances, it’s not cut out for navigating the world of international digital taxation. That’s why it should be utilized alongside Sovos S1 to provide the compliance information necessary so that the company can comply with the tax regulations in their part of the world.
The Procedure for Avoid Tax Compliance Barriers
Initially, when the system begins its migration online, both SAP and non-SAP ERP’s start sending their data to the cloud. Connecting the Sovos S1 server to these ERPs along with a connection fo Central Finance on the other end ensures that the data from these ERP’s are adequately compiled and arranged to follow international tax compliance standards. As time goes by, older systems will become decommissioned, and the data will begin to run solely through the Central Finance hub, with Sovos S1 providing the guidelines for the system to ensure that it doesn’t breach any of the constantly changing tax regulations. Finally, just like playing online pokies real money, when all the data has been centralized, and the older ERps are decommissioned, SAP Central Finance will liaise directly with Sovos S1 to keep the company compliant going into the future.
The Growth of Electronic Tax Compliance
In Latin America especially, many countries have adopted electronic tax compliance. Notoriously in these countries, paper-based taxation had faced a lot of problems with fraud and tax evasion. Governments, to limit the amount of corruption within the system, introduced electronic taxation methods that have now become commonplace. Because of the ease with which governments can now change their taxation policies, these standards are in constant flux. Tax compliance that relied on an electronic base is slowly spreading around the world, with countries in Europe noting how good it has been in South and Central America and considering its use there as well. To navigate these complex and convoluted systems, a centralized digital database like SAP Central Finance linked to a compliance engine like Sovos S1 is a necessity. In places where errors in the calculation of taxes could mean a complete halt to supply chains, including this type of software isn’t just a suggestion; it’s a necessity.