Ensuring Tax Compliance is a Bedrock of the SAP S/4HANA Migration
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Key Takeaways
⇨ SAP is ending mainstream support for SAP ECC in 2027, and a significant number of companies are yet to migrate to SAP S/4HANA, risking operational challenges and compliance issues.
⇨ Only 28% of SAP organizations are developing a comprehensive digital tax strategy as they transition to SAP S/4HANA, indicating many are falling behind in ensuring tax compliance with evolving global regulations.
⇨ To avoid resource shortages and compliance gaps, companies should proactively engage migration specialists and automated solutions, such as those offered by Sovos, to enhance their tax processes and leverage SAP S/4HANA's capabilities.
SAP is ending mainstream support for SAP ECC in 2027, yet many companies have not yet decided to migrate to SAP S/4HANA ahead of the deadline. This leaves them with challenges to overcome in order to avoid operational risks, technical debt, and resource constraints. These can threaten their ability to execute essential business functions going forward, such as tax compliance.
More jurisdictions are implementing new tax digitization requirements, with tax authorities across the globe introducing e-invoicing and continuous transaction controls (CTCs) to close the VAT gap. Tax compliance requires processes to be updated to comply with these digital tax changes.
Supporting Compliance Across All SAP Deployments
Legacy reporting processes, organizational structures, and technologies that continue to directly interact with SAP systems need to evolve to accommodate the move to SAP S/4HANA. SAPinsider’s recent Tax Technology Innovation and Automation report found that just 28% of SAP organizations are prioritizing the development of a comprehensive digital tax strategy that aligns with move to SAP S/4HANA. Additionally, just 29% have fully transitioned to SAP S/4HANA, leaving the vast majority of companies lagging.
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Organizations must begin their SAP S/4HANA journey while also ensuring that tax compliance is a key consideration amid the move. To help simplify this important transition, many SAP organizations are partnering with Sovos.
Planning for Success
Working with a partner like Sovos, that has experience with digital transformations, can help make the SAP S/4HANA journey seamless while maximizing ROI. A well-planned transition allows businesses to test, optimize, and validate tax solutions within their new S/4HANA environment, ensuring smooth operations.
SAP S/4HANA offers real-time data processing, AI-driven analytics, and automation, enabling companies to enhance decision-making and efficiency in their tax processes. With the help of Sovos, businesses can ensure that their data is well taken care of. This helps to simplify operations and ensure compliance with every jurisdiction in which a company operates.
What This Means for SAPinsiders
Leading companies cannot afford to be left behind. As the deadline to move to SAP S/4HANA approaches, demand for SAP experts, system integrators, and migration specialists will surge, leading to higher costs and limited availability. Moving early ensures companies can access experienced consultants and tailored migration strategies without facing delays due to resource shortages. This can lead to tax compliance gaps, putting businesses at risk for audits and financial penalties. Companies should be proactive and find the resources they need to execute their digital transformation.
Future-proof tax processes are essential. More and more tax jurisdictions are incorporating e-invoicing mandates into their tax regulations, and it is up to companies to get compliant quickly. Organizations cannot afford to rely on outdated legacy practices. These are not only being phased out but also open the risk of manual errors.
Stay on the front foot. Tax compliance is getting more complicated, as different areas around the world are constantly changing and updating tax rates. Organizations need automated solutions like those from Sovos in order to keep pace while also taking advantage of the advanced capabilities that SAP S/4HANA affords them.
