Indirect Tax Compliance in the Digital Era
Rapid changes in indirect tax obligations have made the business of keeping on top of compliance more difficult. It has become more important than ever for businesses to invest in the right technologies to make sure that they are fully compliant in the various jurisdictions where they work.
Businesses are also transferring their advanced tax functions to shared service centres (SSCs). These SSCs can centralise tax reporting and provide sophisticated tax data analysis, freeing up indirect tax specialists for other activities.
This paper examines how solutions for global tax management can facilitate the centralisation and standardisation of tax management, and how SSCs help businesses manage their global tax compliance.
New trends affecting indirect tax
Three major trends are transforming tax compliance and reporting.
Firstly, the increasing obligation for electronic compliance, as governments around the world increasingly use technology to combat tax evasion. In recent years, the number of countries that have imposed electronic compliance obligations to combat tax fraud has tripled, and the pace of change is accelerating.
Secondly, redefining the tax director’s function: today, a global indirect tax director must understand international governance and policy, so they can monitor how legislative change shapes corporate tax policy. They must also get to grips with global process compliance, and indirect tax technology so they can define and meet their technological needs.
The third major trend is the increasing centralisation of tax activities in SSCs.
Momentum Building for Shared Service Centers
The use of SSCs continues to evolve.
With the imposition of new compliance requirements, organisations are forced to operate differently. This in turn can provide an opportunity for them to improve their business processes.
After they optimise back-office operations, SSCs can have a bigger role in promoting better processes and technologies throughout the enterprise. Many organisations are transferring more complex processes to SSCs, which are evolving into strategic business partners.
Historic Challenges
Certain processes have been excluded from the move to SSCs, for various reasons;
For one thing, data being held in disparate systems can lead to unnecessary manual work and the risk of errors. Language barriers and localised tax requirements can also make it difficult to centralise business processes.
Historical indirect tax reporting has also been a challenge. Old methods that rely on local knowledge limit control, increase dependence on local tax managers, and are more labour intensive.
Traditional ERP systems do not offer the visibility and real-time insights that a centralised system needs.
SAP® Solutions for Global Tax Management
This paper shows the benefits of implementing SAP S/4HANA® and SAP® solutions for global tax management.
The software offers a single source of truth, and is a true catalyst for tax compliance transformation. It allows organisations to expand their operations and adapt to an evolving business model without additional complexity or costs.
SAP solutions can be deployed on top of SAP S/4HANA. These next-generation solutions allow companies to redefine their end-to-end processes so they can scale globally, while complying locally.
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