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As both businesses and governments go digital, tax authorities are constantly introducing new tax compliance mandates enforcing transparency of data to prevent tax evasion of course, but also to maximize the efficiency of tax collection.
Over 30 countries are moving – or have already done so – into this direction. And below are just some examples:
This trend can be seen in 2 lights: a constant threat of fine from authorities, or an opportunity to automate tax compliance.
If the role of SAP Document and Reporting Compliance to fulfil e-invoices, e-reporting, statutory and audit reports is clear, it seems that the benefits that SAP Risk and Assurance Management could bring to the tax compliance picture were less crystal. In this short blog, this is precisely what I’d like to address.
A simple objective: minimizing the risk of non-compliance
As hinted to earlier this year, SAP Risk and Assurance Management covers much more than Finance. This easy to deploy Cloud service solution has continuously been enhanced since its inception in 2021 and is now a full control and compliance tool focused on minimizing the risk of non-compliance – regardless of the regulatory area: Internal Control over Financial Reporting, IT Security, Sustainability… or Tax obligations!
As quality of tax data becomes a core focus for authorities, what good is it to be able to submit the reports effortlessly and on time, if you are not sure of the information it is based on?
This is when SAP Risk and Assurance Management comes into play, and it can offer: assurance on the data communicated to the authorities. Early detection of issues allows compliant reporting, hence helps avoid fines or even legal actions for negligence by “catching” anomalies in reported data before it is sent to the authorities. Furthermore, no data is replicated since SAP Risk and Assurance Management applies controls directly on the live data for near real time identification or issues.
And since different countries follow different approaches, the solution offers a flexible control framework to be able to manage tax controls by process or by risk. All within same environment.
Detect and remediate
To eliminate manual tax data checks and ensure consistency on the way the controls are applied across the entire company, SAP Risk Assurance Management provides a central control framework and enables all checks to be applied automatically to 100% of transactions.
This helps tax departments move away from spot check to full scope, while reducing workload at the same time by only raising exceptions that need to be resolved.
Ready to use (and extensible) business content available out of the box:
Vendors without VAT ID  | Displays a list of vendors (or suppliers) that do not have a value added tax ID or registration. More details |
High sales invoice VAT amounts  | Displays sales invoices that have a value added tax amount that is higher than the specified amount. More details |
Postings without tax codes  | Displays postings for which no tax code has been entered. More details |
Own controls  | These standard controls are of course just examples. Customers can create, configure, and monitor their own automated procedures, or even design their own manual controls with set of steps that need to be performed as part of a compliance check. |
Extension by content providers 
| Via the GRC Content Hub, partner content providers can further extend this list with additional checks and then make them available to other customers. More details |
But it’s not just about detecting discrepancies, it’s also about investigating and solving them. In a digital proof auditable environment.
With the remediation workflow and predefined task lists, issues can be sent to the tax controller expert for resolution in near real time. And with direct navigation to the SAP feeder system (SAP ERP, SAP S/HANA or SAP S/4HANA Cloud), the anomaly can be resolved directly at its source for corrections, adjustments, etc., and not just in the reports. So the discrepancy doesn’t come back at the next reporting cycle when tax accountants will already be very busy investigating other matters!
Embedded automation
As Dr Seuss’s Cat in the Hat would put it: “But that is not all. Oh, no. That is not all”.
In addition to automated checks, automation capabilities within the solution can further help to:
- Simulate the control results so tax experts can optimize the parameters of the checks and their accuracy before rolling them out
- Automatically determine, assign and notify issue owners – here the tax controllers, so that investigation and resolution of the root cause is routed to the right experts straight away
- Integrate with SAP Signavio for process and control synchronization between the two applications:
Illustration of a Procure-to-Pay process modelled in SAP Signavio with tax items invoice checks that can be automated in SAP Risk and Assurance Management
More to come
Technical integration between the 2 solutions to enable drill-down capabilities from a KPI through a compliance issue, down to the error-causing document in the source system is currently planned in our roadmap for 2025. Please note that this is a roadmap item, so all caveats around it not being a commitment, promise or legal obligation to deliver of course apply here.
If you are an existing SAP Risk and Assurance Management, why not activate this additional content and try it out? Your tax team will surely be thrilled to have some of their work automated. And, if you are not yet using this solution, then you may be interested in reading more on the portal for the solution: SAP Risk and Assurance Management on SAP.com
If you are interested in learning more about SAP solutions for Governance, Risk, and Compliance, feel free to fill-in the demo request form!
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