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Navigating you through tax technology solutions: SAP

S/4HANA
Deloitte & SAP
29 May 2018
Agenda

Topic Presenter

Introduction to SAP S/4HANA Frederik D’heer

The changing tax landscape Liesbet Nevelsteen

How can SAP Solutions for Global Tax Management • Tax Service – Tax calculation Philippe Oorts
support you? • Tax Compliance – Validation and audit Erwin Albers
• eDocuments – Electronic Document Management Jolien Lauwens
• Advanced Compliance Reporting – Return calculations and declaration Celine A.
Linda Garcia

Direct tax specific opportunities on further SAP Annelies Dieusaert


automation

Global Trade automation by SAP emerging Nick Moris


technologies

Closing Note and Q&A

© Deloitte Academy 2018 2


Introduction to SAP S/4HANA

3
Frederik D’heer

Partner, Technology
Deloitte

© Deloitte Academy 2018 4


© Deloitte Academy 2018 5
© Deloitte Academy 2018 6
What is SAP S/4HANA?
SAP S/4HANA is the latest ERP solution of SAP.

• S stands for simple


• 4 stands for fourth generation
• HANA stands for In-Memory Real
Time

© Deloitte 2018 7
Introducing S/4HANA
The HANA solution evolved from an in-memory database to a simplified data model
including an improved user-interface and easier deployments

SAP Business SAP Business Suite


S/4HANA Finance S/4HANA
(SAP Simple Finance
SAP HANA Warehouse powered powered by SAP
powered by SAP Enterprise
by SAP HANA HANA
HANA) Management

• In-memory • Real-time analysis • Real-time business • Instant financial • Simplified data model
platform • Real-time • OLAP and OLTP insight • New user experience
reporting together • No aggregate • Advanced processing
• SAP HANA • Single source of truth • Choice of deployment
Enterprise Cloud for
SAP Business Suite
on SAP HANA

2011 2012 2013 2014 2015

© Deloitte 2018 8
Introducing S/4HANA
Speed, efficiency, simplicity and transparency are some of the core values of S/4HANA

Speed in transaction
New User Experience
processing

The Digital Core

Integrated Reporting &


Simplified data model Analysis

© Deloitte 2018 9
Introducing S/4HANA
Fiori

© Deloitte 2018 10
Carrousel warm-up - Fiori examples
Demo 2 - TBD

© Deloitte Belgium 11
Introducing S/4HANA
Infrastructure deployment options

© Deloitte 2018 12
Introducing S/4HANA
From system of record to system of innovation

RUN WIN

© Deloitte 2018 13
Introducing S/4HANA
Enabling the Tax innovations by transition from current SAP ECC solution to SAP
S/4HANA run on the SAP HANA database
Outcome of Digital
Transformation

Customer Specific Solutions Experience


Creation of best-in-class industry solutions that meet customer’s differentiated needs
and are created custom for their organization

Innovation platform
Lights out Finance and Live Factory scenario’s that use Predictive Analytics,
Big Data, IoT, Robotics and Machine Learning
Business Value

S/4HANA Preconfigured Solutions Best-in-class Strategic


Provides a scalable platform with industry best practices, cloud integration, enhanced industry solutions capabilities
usability and embedded BI/analytics

SAP’s S/4HANA Best Practices


Enables standard end-to-end processes to based on best practices and enable both
process standardization and speed

Industry solutions Lights out Finance Competitive edge


S/4HANA
Improves business operations

Data driven user Process


Highly Customized ERP standardization
experience
Typical Current Stretched to meet business Needs
Implementation
Integration with Advanced Unconstrained
additional solutions Tax innovation
Traditional ERP
Future platform Speed to
Provides Core Capabilities
deployment

Standardization & cost effective vs Imagining & Innovation


© Deloitte 2018 14
The changing tax landscape

15
Liesbet Nevelsteen

Partner, Tax
Deloitte

© Deloitte Academy 2018 16


LICENSE GST AUDIT FILE

BILLING
ASSET ACCOUNTING UNIVERSAL LEDGER
GLOBALIZATION COUNTRY-BY-COUNTRY REPORTING
SAF-T

OECD
E-INVOICING CERTIFIED TAXABLE PERSON
REAL TIME REPORTING MAKING TAX DIGITAL BEPS
EXPORT CONTROLS COMPLIANCE WITHHOLDING TAX
VALUE ADDED TAX AUTHORIZATION

PEPPOL
DIGITIZATION
GLOBAL TRADE INDIRECT TAX SPED

DIRECT TAX
GST CONTROL FRAMEWORK SII OPERATIONAL TP
PROPERTY TAX BUSINESS PLANNING
TAX ACCOUNTING

© Deloitte Academy 2018 17


Digitization of Tax
Certification of processes

 Country initiatives across the globe, where a call for transparent and controlled processes is key. Examples:

o Horizontal monitoring (NL)

o SAO certificate (UK)

o AEO certification for customs

o Singapore and GST control framework

 The European Commission introduced the concept of a certified taxable person who will be able to benefit from
certain tax advantages.

© Deloitte Academy 2018 18


Digitization of Tax
SAF-T

 Periodical and on request

o Example: Poland

On request Periodical

Upon request of Tax administration, in case of audit Monthly

SAF-T accounting file (JPK file), consisting of 7 Book 4 of the JPK file
books:
JPK_VAT – VAT evidence
JPK_KR – Accounting books
JPK_WB – Bank account statements
JPK_MAG – Warehouse
JPK_VAT – VAT ledgers
JPK_FA – VAT invoices
JPK_PKPIR – Revenue and expense ledgers
JPK_EWP – Revenue ledger

© Deloitte Academy 2018 19


Digitization of Tax
SAF-T

 Real-time reporting

o Example: Hungary

Business Communication platform


ERP
systems
Invoice
docs

HTA ID & XML


ERP Response

connector

Manual
records Tax authorities

HU compliant
© Deloitte Academy 2018 RTR file 20
Digitization of Tax
SAP solutions for Global Tax Management

Analytical

Periodic
Declaration Validation

Calculation E-Invoicing
Transactional

Tax Calculation Electronic Documents Tax Declarations Validation and Audit


 Cumbersome setup of tax  Growing demand by tax  Growing demand by tax  Low data quality for tax
rules and rates, especially in authorities worldwide to authorities worldwide to
countries with complex rules. provide real-time information provide online tax returns and  Lack of visibility and
audit files governance on tax data and
 Risk of error that cascade  Costly and heterogeneous compliance status
through the whole process infrastructure  Challenges to handle late
adjustments  High vulnerability to fines and
 High and potentially disruptive weak audit defense
maintenance effort for legal  High effort for closing
changes, especially in activities and risk of
heterogeneous landscapes submitting tax reports late or
incorrect, especially with
heterogeneous data sources

© Deloitte Academy 2018 21


SAP Solutions for Global Tax Management
A Holistic Approach to Manage Indirect Tax from a Single Source of Truth

Tax Calculation Validation and Audit Electronic Invoicing Return Calculation and Declaration
SAP Tax Service SAP Tax Compliance SAP eDocuments, SAP SAP ACR, SAP TDF
NFE
 Minimize need for human  Gain visibility of tax compliance  Manage statutory reporting
intervention issues  Comply with many local worldwide with unified user
 Have accurate automatic tax  Automatically identifying regulations mandating the experience
determination wrong tax data use of electronic documents  Enable simple adoption of
 Automatic, non-disruptive  Automatically initiating correction  Simplify operations with one constant legal reforms
legal patches for 120 and documentation measures user interface, pre-  Supports different legal
countries packaged content and formats & direct submission to
integration flows authorities

Analytical

Validation Declaration

Calculation E-Documents
Transactional

© Deloitte Academy 2018 22


How can SAP Solutions for Global Tax
Management support you?

23
SAP Tax Service
24
Philippe Oorts Erwin Albers

Manager, Technology
Deloitte SAP

© Deloitte Academy 2018 25


SAP Solutions for Global Tax Management
A Holistic Approach to Manage Indirect Tax from a Single Source of Truth

Tax Calculation
SAP Tax Service

 Minimize need for human


intervention
 Have accurate automatic tax
determination
 Automatic, non-disruptive
legal patches for 120
countries

Analytical

Validation Declaration

Calculation E-Documents
Transactional

© Deloitte Academy 2018 26


SAP Tax Service
Tax Service is a tax computation engine on SAP Cloud platform which determines and
calculates applicable country-specific indirect taxes for a business transaction

Cloud service Bolt-ons


Tax Service is a cloud based
service which can theoretically
be called from any SAP and
non-SAP system

Indirect Tax Calculation


It can perform indirect tax
calculations, performed based
on pre-delivered content (Tax
Rates and determination
rules)

Gateway for Bolt-ons


The Tax Service can be used
as a gateway (single
integration point) to bolt-on
tax determination software for
complex countries or scenarios

© Deloitte Academy 2018 27


Tax computation Engine

Consumer Tax Decision Tree

Send Tax Parameters Tax Type

Tax Event Type

Tax Rate Type Tax Content

Deductible Type

Invoice

Tax Event
Receive Tax Results
Tax Calculation

© 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ External 28


Tax Service Capabilities and Benefits

Capabilities Benefits
Central Framework Automation
Central tax computation framework across the One calculation engine for consistent tax
customer landscape results

Global Coverage Efficiency


Pre-delivered content for 120 countries Less maintenance effort and reduced
infrastructure

Global Network Compliance


Experience and strong network Automated update of legal changes

Cloud Offering Innovation


Microservice on SAP Cloud Platform Scale flexibility and gain speed to
market

© 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ External 29


SAP Tax Service
Whether or not Tax Service would be a fit to your organization depends multiple
factors, for example: Geographical coverage, functional needs and technical landscape

Geographical Footprint Functional Needs Technical Landscape

120 Countries covered by the Full functional coverage Ideal simplification for:
solution: through: 1. Companies running on a
• 36 advanced 1. Coverage of basic highly developed tax
• 84 basic localized scenarios for all calculation solution,
120 countries striving for
2. Coverage of standardization
country/industry specific 2. Companies running on
scenarios for advanced multiple systems in need
countries of aligned tax calculations
3. Bolt-ons using the single 3. Companies running on
integration point for public cloud system(s)
specific scenarios / that do not allow tax
countries not covered customizations

© Deloitte Academy 2018 30


SAP Tax Compliance
31
Philippe Oorts Erwin Albers

Manager, Technology
Deloitte SAP

© Deloitte Academy 2018 32


SAP Solutions for Global Tax Management
A Holistic Approach to Manage Indirect Tax from a Single Source of Truth

Validation and Audit


SAP Tax Compliance

 Gain visibility of tax compliance


issues
 Automatically identifying wrong
tax data
 Automatically initiating correction
and documentation measures

Analytical

Validation Declaration

Calculation E-Documents
Transactional

© Deloitte Academy 2018 33


SAP Tax Compliance
Part of the SAP governance, risk, and compliance (GRC) solutions, SAP Tax Compliance
can help reduce the risk of inaccurate tax declarations by providing company-wide
checks that automatically detect and address incorrect tax postings

Centralized tax compliance


Central repository for
managing all compliance
checks for sales tax, VAT,
GST, and several other tax SAP GRC
regulations

Automate processes
Eliminate manual workflows
and streamline tax compliance
through an automated tax
control framework
requirements

In-memory computing
Use the superior processing
power of SAP HANA to
process high volumes of
taxable transactions quickly
and accurately

© Deloitte Academy 2018 34


SAP Tax Compliance at a glance

1. Connect data sources SAP Non-SAP

2. Manage / Optimize Checks

Examples:

Check Master data related checks


Repository
Transaction data related checks
Special checks like Chain transactions

4. Take corrective actions

Manage Tasks/ 3. Receive / validate exceptions


Collaborate/
Status
Routing

TM/IA/BU/IT Notifications Exceptions – TM/IA/BU/IT Check Source


integrated Tax Compliance hits System
dashboard

5.
© 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ External 35
Automatic Hit Processing and Predictive Analytics with Tax Compliance

Mitigation triggered
Upper Threshold automatically
Automated Machine
Learning
Manual
Manual Decision
Decision
Lower Threshold Automatically
closed

© 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ External 36


© 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ External 37
Business Benefits
Based on the experience of early adopters

Identify Tax Savings  Paying tax promptly and correctly


Opportunities  Reduce human errors
 Gain insight from data

Cut Operation Costs  Automated tax compliance reporting


 Reduce unnecessary administration costs
 Streamline integration of tax functions with business processes

Facilitate  Enhance audit transparency


Compliance Audits  Increase compliance measurement level
 Strengthen awareness of tax non-compliant activities and risk
impacts

Protect against  Automated continuous monitoring system


fraud and regulatory  Identify potential tax compliance risks with real time email alerts
violations  Integrated remediation process to mitigate tax compliance issues
 Prevent potential indirect tax violators

© 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ External 38


SAP eDocument
39
Jolien Lauwens Linda Garcia

Manager, Tax
Deloitte SAP

© Deloitte Academy 2018 40


SAP Solutions for Global Tax Management
A Holistic Approach to Manage Indirect Tax from a Single Source of Truth

Electronic Invoicing
SAP eDocuments, SAP
NFE

 Comply with many local


regulations mandating the
use of electronic documents
 Simplify operations with one
user interface, pre-
packaged content and
integration flows

Analytical

Validation Declaration

Calculation E-Documents
Transactional

© Deloitte Academy 2018 41


SAP eDocument
eDocument framework has been developed by SAP to comply with local regulations
mandating the use of electronic documents to be sent to business partners and/or
legal authorities

Electronic invoicing and


documents
eDocument allows companies
to create electronic documents
in legally required format

Communication
It orchestrates the
communication with the
authorities as well as other
document receivers

SAP ECC or S/4HANA


eDocument can be used
directly in SAP ERP and SAP
S/4HANA

© Deloitte Academy 2018 42


Key Pain Points Solution Points
Total Cost of Operations
 Multiple solutions to be implemented and supported  One Solution
 Multiple contract partners  End-to-End approach

Usability
 Multiple monitors, configuration  Unified user experience
 and processes  Reduced set of tools

Data Inconsistency
 Adjustments done on 3rd party software not reflected  Solution integrated with the backend
in backend (ECC/S4HANA)

Ineffective Support
 High effort for synchronization of legal changes  One Globalization Network
 Multiple counterparts  Professional processes and services
 Lack of process expertise from service provider

© 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ INTERNAL 43


SAP ERP, option for e-document processing provides configurable, pre-
packaged content and process orchestration capabilities for compliance with e-
document regulations in multiple countries

It allows you to
– Create electronic documents in legally required XML format.
– Orchestrate the communication with the authorities as well as other document
receivers
– Configure and customize country-specific fields
– Monitor communication, trace source documents and handle exceptions directly in
SAP ERP and SAP S/4HANA

© 2018 SAP SE or an SAP affiliate company. All rights reserved. ** ) Status FAIL was introduced before SNRQ and is obsolete now Internal 44
Key Product Features eDocument Cockpit

Export file PDF Display eDocument history


generation Application Log
Submit / Resubmit (XML-based)
- Switch to contingency
Information about the - Import data from
Generic information selected process
about the Cockpit non-SAP systems
- Send to customer
- Accept/Reject
- Cancel/Delete
Selection variants
including filter by
source data Navigate to
interface monitor

Central monitor
for all scenarios Storage & display of
attachments*
Only authorized
processes are
displayed

* Planned

Batch & List handling Navigate back to source document


© 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ INTERNAL 45
SAP Cloud Platform Integration allows you to easily exchange data in real-time,
integrating processes and data between cloud apps, 3rd party applications and
on-premise solutions

It allows you to
– Access a deep catalog of integration flows
– Integrate both processes and data through unified technology engineered for the
cloud
– Get an integration service that is secure, reliable and delivered and managed by SAP
in SAP’s secure data centers across the globe
– Lower TCO with an affordable, pay-as-you-go subscription model and minimal up-
front investment

© 2018 SAP SE or an SAP affiliate company. All rights reserved. ** ) Status FAIL was introduced before SNRQ and is obsolete now Internal 46
Solution Landscape – eDocument Scenarios SAP eDocument Solution

SAP ECC or S/4HANA Communication Platform Recipient


e.g. SAP Cloud Platform Integration

Document – Type 1 Integration flow Country A

Document – Type 2 Country B

SAP APPL 6.00


SAP Netweaver 7.02

– Country Format Mapping – Communication – Validation


– Business Monitoring – Authentication/Digital Signature – Approval/Registration

© 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ INTERNAL 47


Solution Architecture

Suite Legal MM returned


SD Del GI SD Bill FI IS-U Real Estate
Reports invoice

SAP ERP, option for e-document processing


other
Chile Peru Netherlands Belgium Germany Turkey
country

Communication SAP Cloud Platform Integration Digital Compliance Service 3rd Party
Platform
Peruvian other
DTE EU-UBL xRechnung UBL TR
UBL format

Recipient other Business Business


SII SUNAT TRA
recipient Partner Partner

© 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ INTERNAL 48


Scenarios (Available / Planned )
Peru Belgium Germany Netherlands Portugal
Customer Invoice Customer Invoice Customer Invoice Customer Invoice Transport Registration
(Peruvian eInvoice) Vendor Invoice Vendor Invoice Vendor Invoice
Consumer invoice (Boleta)
Withholding Tax Certificate
Tax Collection Certificate
Hungary
Chile Transport Registration
(EKEAR)
Customer Invoice (DTE
Customer Invoice
eInvoice)
Vendor Invoice (DTE
eInvoice)
Delivery Note Turkey
Consumer Invoice (Boleta) Customer Invoice
Ledgers Consumer Invoice
Vendor Invoice
Colombia Export Registration
Transport Registration
Customer Invoice
Vendor Invoice

Argentina Thailand
Customer Invoice Customer Invoice

Mexico Italy Spain Taiwan


Payment Receipt Customer Invoice (Fattura PA) Customer Invoice (FACTURAE) Customer Invoice
Customer Invoice Vendor Invoice VAT Register Books (SII Consumer Invoice
Reporting) Vendor Invoice
© 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ INTERNAL 49
Coffee break
15 mins

Break

10 mins

© 2018 Deloitte The Netherlands 50


SAP Advanced Compliance Reporting
51
Jolien Lauwens Celine A.

Manager, Tax
Deloitte SAP

© Deloitte Academy 2018 52


SAP Solutions for Global Tax Management
A Holistic Approach to Manage Indirect Tax from a Single Source of Truth

Return Calculation and Declaration


SAP ACR, SAP TDF

 Manage statutory reporting


worldwide with unified user
experience
 Enable simple adoption of
constant legal reforms
 Supports different legal
formats & direct submission to
authorities

Analytical

Validation Declaration

Calculation E-Documents
Transactional

© Deloitte Academy 2018 53


SAP Advanced Compliance Reporting
Advanced Compliance Reporting (ACR) has been developed by SAP to ensure legal
compliance in reporting with regulations around the world – VAT, GST, SAF-T or many
other legal reporting requirements

Compliance
ACR allows companies to use
and/or create legal reports in
the required format

Submission to authorities
It allows the immediate filing
with different tax authorities

Data insights
Quickly review and analyse
report data with embedded
analytics

© Deloitte Academy 2018 54


Business value of SAP S/4HANA for advanced compliance reporting

Compliance Flexibility
Globally compliant with easy Fast adoption of constantly
adoption of legal changes, changing legal reforms and
different legal formats and business needs through flexible
direct submission rules and extendible design
environment

Advanced
Compliance
Reporting
Efficiency Transparency
State of the art capabilities with Monitors your global legal
modern user experience compliance reporting with full
leading to the next generation audit traceability in a unified
of legal reporting dashboard with embedded
analytics

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ External 55


Customer
ACR Solution Components

Technical User
Define Compliance Reports
Data Sources Activities
Mapping XSD/Schema Reporting Reporting
CDS Views Phases SAP Fiori app
Levels Activities
ABAP program
BW Queries
Event Fiori Navigation Ext.
BRF+ Report Definition Handlers Report Category
Functions

SCP Cloud
Advanced Integration

Compliance
Configurations Reporting Government Gateway

Run Compliance Reports

Business Data Retrieving Generation – Legal Generation – Embedded Manual Audit Trail
User and Processing Reports Correspondences Analytics Adjustments

End-To-End Reporting Process Within ACR


© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC Outside ACR 56
ACR Solution Capabilities
Available Capabilities Planned Innovations* Solution Vision*
 Single framework for all statutory reporting with Fiori UX  Workflows for Approvals  Collaborations
 Reporting dashboard to monitor status  Report due Notifications  Digital Assistance via Co-Pilot integration
 Multiple legal output formats – XML, XBRL, TXT, PDF  Very Large file handling  Global Compliance Monitor
forms, JSON  Features based on requirements from future  Digital Board Room Presence
 Real Time Reporting based on CDS views legal reports  Predictive Analytics
 Embedded Analytics  E-mail for Correspondence  Innovations aligned with SAP Leonardo
 Data preview  Advanced Scheduling
 Manual Adjustments-Output format  Mail communication to business partners
 Ability to generate correction runs  Manual Adjustment: Handling of calculated
 Government verification elements
 Electronic submission with Government Interfaces via HCI  Data Aging for legal reporting and analytics
 Complimentary compliance attachments  Access to Archive data for legal reporting
 Partner Correspondence  Design Studio Integration
 Audit Trail  Versioning of Report Definitions
 Versioning of Legal Output Formats  Logical Grouping of Selection screen parameter
 Incorporating Business Rules
 Flexible Reporting Levels
 End-to-End reporting process through Reporting Activities
o Manage Tax Items
o Enablement of Tax Payable Postings
 Self Service Configurations
 Extensibility Using Define Advanced Compliance Reports
 Scheduling
 Ad-hoc Reporting

SAP Globalization Services


Local Solutions. Global Success.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 57
DISCLAIMER: This map represents SAP’s current plan, but subject to change without any prior notification. Certain planning constraints such as regulatory and licensing issues are outside of our control and may impact the timelines
DEMO

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ Internal


Advanced Compliance Reporting – Premium Features

What’s Included in SAP S/4HANA OP Additional Advanced Compliance


Enterprise Management Reporting features
 Single framework for all statutory reports with Fiori Ux  Data preview
 Reporting dashboard to monitor the reporting status  Audit Trail
 Multiple legal formats – XML, XBRL, TXT, PDF forms  Embedded Analytics
 Correction run  Manual Adjustments of reporting data
 Business Partner Correspondences before submission
 Manual submission of reports via download options  Incorporating Business Rules
 Electronic submission to Government via HCI  End-to-end reporting process through
reporting activity concept
 ACR Design time tool
 Few Reports

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ External 59


Customer
Direct tax specific opportunities on
further SAP automation

60
Annelies Dieusaert

Partner, Tax
Deloitte

© Deloitte Academy 2018 61


This is THE moment

Once in a corporate life time opportunity to make the


direct tax processes more efficient

© Deloitte Academy 2018


62
62
Background

Indirect Direct
Tax Tax
SAP‘s Global Tax Management is
an attempt to bring relevant Tax Service
pieces from SAP tax solutions
together to cover the end-to-
end requirements of a tax
department. Advanced
Compliance SAP Tax Compliance
The goal is to get to a place Reporting (ACR) 20%
where SAP is providing 20% of
customers’ tax framework /
requirements, and partners
provide the other 80%.
PARTNERS e-Documents
80%

© Deloitte Academy 2018


63
Tax relevant data is intertwined in many business process
Tax requirements are identified throughout the full life cycle of a company’s ERP processes, meaning that in
any S/4 implementation an “end-to-end” consideration of direct and indirect tax is critical.

Tax accounting/tax compliance Billing – Proper VAT treatment


• Legal entity design • Configuration of AR VAT determination rules in the ERP
• Jurisdiction specific VAT and WHT returns and reports • Third party and intercompany transactions
• Associated returns specific to each jurisdiction (Intrastat, sales • Invoice requirements (paper vs. electronic)
listing, blacklist, etc.) Correct master data
• Chart of account requirements • Product master and customer master
• Reporting requirements – tax data fields • Anticipated WHT treatment
• Exception reporting Localization
• Reconciliation of returns with P&L/annual accounts • Consider jurisdictional differences (province/state/country
• Electronic submission of tax returns level)
integration with “bolt on” tax authority • Electronic invoice verification with tax authorities
Record
approved software Order
to
to cash
• GAAP to statutory to tax reporting report

Tax accounting/tax compliance Acquire Procure Procurement – Proper VAT/WH treatment


to retire to pay
• Additions: basis • Configuring AP VAT & WHT determination rules
• Disposals: proceeds • Third party and intercompany transactions
• State apportionment: property • Establish proper process for AP processing
• Valuation • VAT/WHT impact to AP scanning solutions
• Depreciation Correct master data
• Construction in progress • Product master and vendor master
• Tax basis for gain/loss Localization
Property tax • Consider jurisdictional differences (province/state/country level)
• Low value assets • Electronic invoice verification with tax authorities
• Assets by location
© Deloitte Academy 2018
64
SAP Tax design considerations and S/4HANA functionality
S/4HANA is currently less focused on creating new functionalities for direct tax processes. Certain new
functionalities will provide greater support for direct tax/. Deloitte is closely working with SAP to discuss (and
possibly resolve) gaps.

Tax – SAP Design


considerations
• Ledgers S/4HANA Design enabled
• Chart of accounts & document Tax output-
types 1. Universal Ledger
• Consolidations, eliminations & 2. CIT Compliance
top-side adjustments Enablement
• Profit centers 3. Extension ledgers
• Cost centers
4. Business Planning &
• Plants & storage locations
• Trading partner Consolidation
• Project systems 5. Asset Accounting
• Fixed assets
• U.S. reporting
• Intercompany processing &
TP

© Deloitte Academy 2018


65
Direct Tax Enabled by SAP
Multiple components of SAP solve the Direct Tax puzzle

 Universal Journal
Brings together Accounting & Controlling
Removes the manually intensive step of reconciliation
while providing a single source of truth for all your
financial data (e.g. material ledger, CO-PA, …)
 Extension Ledgers
Creation of parallel tax ledger via extension ledger
• New type of ledger
• Contains delta journal entries relevant for tax
 CIT Compliance Enablement • Avoids duplication of journal entries
Advanced Compliance Reporting
• Reporting dashboard to view and monitor
your reporting obligations  Business Planning & Consolidation
• Electronic or manual report submission
• Track relevant data for further analysis
(BPC)
• Supports correction runs BPC Optimized & BPC 11.0 for BW/4HANA only
Fiori: Set up end-to-end compliance workflows (relevant for Operational Transfer Pricing)
• No data replication
• Transactional & Master Data available in real-time
 Asset Accounting • Flexible drill-down and end-to-end simulation
capabilities
• Integration with the Universal Journal
• Asset postings transferred to finance at asset level
• More asset information available in finance
• No redundant data storage
• Reconciled General Ledger Accounting & Asset Accounting
• Real-time posting
• Planned values available in real time and changes to master data and transaction data are constantly included
© Deloitte Academy 2018
66
SAP & Direct Tax Processes
Functionality comparison

Tax Process Functionality (non exhaustive) SAP ECC S/4HANA 3rd Party Software

• Stat ledger
1
Statutory • Extended ledger
Accounting • Statutory accounts
• Statutory notes
2
Tax Accounting • Line item information
• Tax provision calculation

3
• CIT/Tax ledger
CIT Compliance • Extended ledger
• Tax return
• Annexes
4 • Pricing
Transfer Pricing • Margin control/COGS
breakdown
• Cost recharge of services
• TP documentation

© Deloitte Academy 2018


Transfer Pricing – The Cycle
Let’s make this practical

Business
model
Operational Transfer Pricing Challenges
Planning /
Defend Ex-ante 3 Examples
documentation
Profitability analysis across supply chain
Splitting legal entity P&L’s into functions and products to
compare transfer pricing profit targets across the global
(Ex-post) TP Life TP supply chain
Documentation Cycle procedures

Automation of cost allocations


Capturing data from multiple source systems, aggregating,
categorizing, marking-up, allocating and invoicing of
Control Calculate centralized costs that benefit affiliated entities across the
supply chain

Process Data accessibility


To comply with transfer pricing reporting requirements,
including Country by Country (“CBC”), supporting consistent
Plan Operational Transfer Pricing views of data across financial statements, statutory
accounts, master file, local file, CBC report, and tax returns
Operate

Defend
© Deloitte Academy 2018
68
OTP Enabled by SAP
Multiple components of SAP solve the OTP puzzle

Universal Journal Calculations in


Removes the manually SAP S/4HANA
intensive step of The ability to allocate
reconciliation while centralized costs
providing a single across the business
source of truth for all and create complex
your financial data calculations.
Material ledger-
Transfer pricing

BPC Optimized
Seamless integration of
SAP Analysis for Office
actuals and planning in the Allowing ability to easily
same system avoiding integrate Microsoft functionality
multiple parallel planning with your data stored in SAP
processing, transfer and S/4HANA or BPC creating
extraction of data between consistent, standard reports
planning systems, and
© Deloitte Academy 2018 additional manual steps
69
Conceptual SAP S/4HANA OTP Solution Architecture
OTP process recorded through orchestrated process across SAP applications

Aggregation of Plan
and Actuals Data

Capture Plan Data


Reporting &
Other SAP Apps Input
Templates
Analytics
BPC (AO, SAC,
SAP Finance BOBJ)

SAP Controlling

SAP Materials
Management Calculations

SAP Sales & Allocate to Legal


Distribution Markup per
Entities by Allocation Transfer
Tax Transfer Pricing
Appropriate Logic S/4HANA Price
SAP Production Calculation Policy
Driver Calculation Calculation
Planning

SAP tool used in the Transfer


Pricing reconciliation and
adjustment process SAP S/4HANA
Source transaction ledger Database (Universal Journal)
system Fully burdened
P&L by I/CO

© Deloitte Academy 2018

70
Next steps – Tax Technology Roadmap

01 04
Understand your company’s Assess cost-benefit in
S/4HANA upgrade time table getting key direct tax
& key milestones and how requirements addressed in
they relate to the direct tax the S/4HANA upgrade
processes.

02 05
Define what is critical to Explain tax business case to
improve in your current tax key S/4HANA upgrade
operations stakeholders (Finance, IT, …)

03
Analyze the tax
functionalities available in
current SAP and in to be
S/4HANA

© Deloitte Academy 2018


71
Global Trade automation by SAP
emerging technologies

72
Nick Moris

Partner, Tax
Deloitte

© Deloitte Academy 2018 73


Case studies
Robotics and Artifical Intelligence 74
Case studies
Robotics and Artificial Intelligence

Companies are responsible to correctly classify their products


for both customs and export control purposes
The classification code determines
• Import duty rates, preferences
• Quotas, suspensions, health and sanitary measures
• VAT, excise duties Customs
classification
• Licence, authorization, reporting,
and recordkeeping requirements
• Shipping documentation and
labelling requirements
Export
control
classification

© Deloitte Academy 2018 75


Case studies
Robotics and Artificial Intelligence (cont’d)

Consequences of incorrect classification include

Export control classification Customs classification


Criminal penalties Overpaid/Underpaid duties
- Personal liability for export control violations

Supply chain planning – incorrect view


High civil penalties of possible use of FTA

Denial of export privileges Import clearance delays

Listing as “sanctioned entity” Penalty action (fines)


- Supply chain disruption

Damage to reputation Fraud accusations

© Deloitte Academy 2018 76


Case studies
Robotics and Artificial Intelligence (cont’d)

Artificial
Robotic Process Automation Intelligence
Classification is manual,
repetitive and rule-based
Artificial Intelligence aims to
Robotic Process Automation: mimic human judgement
Partially or fully capable to such as perceiving, gathering
automate classification evidence and reasoning
processes

Decrease cycle times Reduce operational costs Improve accuracy

© Deloitte Academy 2018 77


Case studies
Robotics and Artificial Intelligence (cont’d)

Data Output and feedback


acquisition Processing
high
Fully automated

medium
Confidence Recommendation
level engine
Preprocessing
Extracting Classification Classification
and data
material codes engine codes
cleansing

low
Manual
intervention

Update model
Robotic
enrichment

© Deloitte Academy 2018 78


Case studies
Trade Automation apps 79
Case studies
Trade Automation apps

Product classification requires a detailed understanding of the regulations as well as in-depth knowledge
on the technical specifications and functional capabilities of a specific product.

Information regarding the latter is typically not available within the global trade team and requires close
cooperation with product development (engineers, designers). Trade automation apps provide access to
these resources in a flexible way and increase the coopration with the trade teams. Further, regulatory
knowledge can be built in the apps and allow engineers, based on their technical knowledge of the products,
to provide the correct input to support correct classification of the products.

© Deloitte Academy 2018 80


Case studies
Trade Automation apps

• Machine learning • Products will be grouped based on similarities


model will indicate for answering the questionnaires
different confidence • The questionnaires can be answered
levels for each for the entire range of “grouped” items
proposed ECCN code or for a separate product

Assign
Each ECCN
Candidate Answer ECCN code or
Indicate is linked to a
ECCN codes the questions “no dual use
if the product questionnaire Products
will be according item”
is potentially containing are
suggested to the depending
subject to decision tree of classified
for each of the product- on the results
dual-use “yes” or “no”
indicated specific technical from the
controls technical
products specifications questionnaire
questions

• Logic based on different correlation • Interactive decision tree questionnaires


techniques including
• Only minimum amount of questions
− HS – ECCN correlation would be generated to allow faster and
more efficient decision process
− Keywords – ECCN correlation
supported by text mining

© Deloitte Academy 2018 81


Case studies
Trade Automation apps (cont’d)

© Deloitte Academy 2018 82


Q&A

83
Contact details

84
Contact - Deloitte

Frederik D’Heer Liesbet Nevelsteen


Partner Technology Partner GTCE
Deloitte Consulting Deloitte Tax & Legal

T: +32 2 749 59 47 T: +32 2 600 65 60


E: fdheer@deloitte.com E: lnevelsteen@deloitte.com

Annelies Dieusaert Nick Moris


Partner Business Tax Partner Global Trade Advisory
Deloitte Tax & Legal Deloitte Tax & Legal

T: +32 2 301 82 81 T: +32 2 600 66 03


E: andieusaert@deloitte.com E: nmoris@deloitte.com

© Deloitte Academy 2018 85


Contact - Deloitte

Philippe Oorts Jolien Lauwens


Manager Technology Manager Indirect Tax
Deloitte Consulting Deloitte Tax & Legal

T: +32 2 600 68 61 T: +32 2 600 62 33


E: poorts@deloitte.com E: jlauwens@deloitte.com

© Deloitte Academy 2018 86


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© Deloitte Academy 2018