Preface

13

Objective of This Book

13

Readers of This Book

14

Structure of This Book

14

Acknowledgments

16

1 Introduction to Taxes with SAP S/4HANA

17

1.1 The Tax Function

17

1.1.1 SAP S/4HANA as a Unique Occasion for Tax Functions

17

1.1.2 Challenges and Requirements

18

1.2 The Tax Operating Model and SAP S/4HANA

22

1.2.1 IT Infrastructure and Architecture

23

1.2.2 Tax Data Management

24

1.2.3 Tax Processes

26

1.2.4 Tax Talents

27

1.2.5 Governance and Organization

28

1.2.6 Tax Business Case

29

1.3 Taxes with SAP S/4HANA

30

1.3.1 What’s New?

30

1.3.2 SAP Solutions for Global Tax Management

36

1.4 Getting Started with SAP S/4HANA

47

1.4.1 Deployment Alternatives

47

1.4.2 Migration Strategies

48

1.4.3 SAP Activate Project Methodology

51

1.5 End-to-End Processes

55

1.5.1 Tax Processes

55

1.5.2 Business Processes

58

1.6 Summary

60

2 Indirect and Direct Tax Requirements

61

2.1 Indirect Tax

61

2.1.1 Global Indirect Tax Systems

61

2.1.2 Taxable Events

68

2.1.3 Tax Exemptions

70

2.1.4 Grouping

72

2.1.5 Transaction Types

74

2.1.6 Standard Reporting Requirements

76

2.1.7 Digital Reporting Requirements

80

2.2 Direct Taxes

86

2.2.1 Base Erosion and Profit Shifting

86

2.2.2 Base Erosion and Profit Shifting 2.0

88

2.2.3 Standard Audit File for Tax

91

2.2.4 Financial Reporting Standards

93

2.2.5 Tax-Relevant Reporting Requirements

93

2.3 Summary

95

3 Basic Settings in SAP S/4HANA

97

3.1 Financial Accounting

97

3.1.1 Tax Codes

97

3.1.2 Tax Accounts

116

3.1.3 Plants Abroad

119

3.1.4 Exchange Rates

126

3.2 Sales and Distribution and Materials Management

133

3.2.1 Tax Classifications

133

3.2.2 Tax Identification Numbers

145

3.2.3 Tax Determination with Pricing

156

3.3 Integration of SAP Modules in Tax Determination

160

3.3.1 Materials Management and Financial Accounting

160

3.3.2 Sales and Distribution and Financial Accounting

163

3.4 Smart Forms

170

3.5 Summary

173

4 Indirect Tax Determination in SAP S/4HANA

175

4.1 Condition Logic in SAP

175

4.1.1 Price Calculation Procedure

176

4.1.2 Condition Types

181

4.1.3 Access Sequence

184

4.1.4 Condition Tables

187

4.1.5 Access Requirements

197

4.2 Indirect Tax Determination in Purchasing

198

4.2.1 Electronic Data Interchange versus Purchase Info Records

198

4.2.2 Purchase Order

200

4.2.3 Invoice Posting

201

4.2.4 Customization Scenarios

202

4.2.5 Solutions for Procurement

204

4.3 Indirect Tax Determination in Sales

208

4.3.1 Sales Order

208

4.3.2 Invoice

212

4.3.3 Customization Scenarios

215

4.4 Special Indirect Tax Transactions

217

4.4.1 Chain Transactions/Drop Shipments

217

4.4.2 Internal Stock Transfers

227

4.4.3 Special Payment Processes

235

4.5 Summary

249

5 Indirect Tax Engines and Add-Ons

251

5.1 SAP Condition Logic

251

5.2 Add-Ons

253

5.3 Tax Service with SAP

253

5.4 External Tax Engines

256

5.5 Decision Support for Vendor Selection

258

5.6 Summary

260

6 Custom Coding for Indirect Taxes

261

6.1 ABAP Basics for Indirect Tax

262

6.1.1 User Exits, Customer Exits, and Business Add-Ins

262

6.1.2 Objects

263

6.1.3 Includes, Functions, Subroutines, and Programs

264

6.1.4 ABAP Statements

265

6.2 User Exits for Tax Determination in Sales

266

6.2.1 Sales Orders

267

6.2.2 Invoices

274

6.2.3 Additional Enhancements

276

6.3 Customer Exits for Tax Determination in Purchasing

280

6.3.1 Identifying Customer Exits

281

6.3.2 EXIT_SAPLMEKO_001

284

6.3.3 EXIT_SAPLMEKO_002

287

6.3.4 Additional Enhancements

288

6.4 Summary

289

7 Direct Taxes in SAP S/4HANA

291

7.1 Direct Tax Basics

291

7.1.1 End-to-End Process for Direct Taxes

292

7.1.2 Direct Tax Organizational Structures and Master Data

294

7.2 Organizational Structures

295

7.2.1 Ledger

295

7.2.2 Company Code

310

7.2.3 Chart of Accounts

312

7.2.4 Withholding Tax

316

7.3 Master Data

317

7.3.1 Business Partner

318

7.3.2 General Ledger Account

319

7.3.3 Asset

321

7.4 Tax Tagging

322

7.5 Direct Tax Data Analytics and Monitoring

326

7.5.1 SAP Tax Compliance

328

7.5.2 Embedded Analytics

329

7.5.3 Comparative Review

331

7.6 Direct Tax Filing and Reporting

332

7.6.1 SAP Profitability and Performance Management

333

7.6.2 SAP Document and Reporting Compliance

337

7.7 Direct Tax Planning with SAP Analytics Cloud

340

7.7.1 Direct Tax Planning Scenarios

341

7.7.2 Map Fiscal Application Scenarios

342

7.7.3 Implement Tax Scenarios

344

7.8 Summary

347

8 Managing Transfer Prices in SAP S/4HANA

349

8.1 Operational Transfer Pricing

349

8.1.1 Tax Transfer Prices

350

8.1.2 Management Transfer Prices

350

8.1.3 Operational Transfer Prices

350

8.1.4 Transfer Pricing Process

351

8.1.5 Challenges and Requirements

355

8.2 Transfer Price Calculation

357

8.2.1 Cost-Plus Method in SAP S/4HANA

358

8.2.2 Resale-Minus Method in SAP S/4HANA

361

8.2.3 SAP Profitability and Performance Management

363

8.3 Transfer Price Determination

364

8.4 Transfer Price Monitoring and Adjustments

364

8.4.1 Extend Universal Journal

365

8.4.2 Derivation and Validation

368

8.4.3 Indirect Cost Allocation Limitations

369

8.4.4 SAP Profitability and Performance Management

369

8.5 Transfer Price Reporting and Simulation

371

8.6 Transfer Price Testing and Compliance

373

8.6.1 Transaction Matrix

374

8.6.2 Country-by-Country Reporting

375

8.7 Summary

377

9 Tax Reporting in SAP S/4HANA

379

9.1 Worldwide Tax Reporting Requirements

379

9.1.1 The Five Fingers of Tax Administration

380

9.1.2 Maturity of Tax Reporting Requirements

381

9.1.3 Tax Record Evidence Requirements

383

9.1.4 Global Tax Reporting Compliance Models

384

9.2 Standardized Tax Reporting in SAP

385

9.2.1 Standard Report for Value-Added Tax Returns

385

9.2.2 Standard Reports for EC Sales List

394

9.3 SAP Document and Reporting Compliance for SAP S/4HANA

398

9.3.1 Setting Up Compliance Reporting

398

9.3.2 Setting Up EC Sales Reporting

407

9.3.3 Electronic Document Processing

408

9.4 Summary

412

10 Tax Monitoring in SAP S/4HANA

413

10.1 Why Monitor Tax?

413

10.1.1 Compliance Risks

414

10.1.2 Efficiency Improvements

415

10.1.3 Cash Flow Optimization

416

10.2 Tax Monitoring Requirements

417

10.3 Tax Control Framework

419

10.4 SAP Solutions for Indirect Tax Monitoring

424

10.4.1 SAP S/4HANA Embedded Analytics

424

10.4.2 SAP Analytics Cloud

425

10.4.3 SAP BW/4HANA

426

10.4.4 SAP Tax Compliance

426

10.5 Monitoring with SAP Tax Compliance

429

10.6 Summary

438

Appendices

439

A Europe

441

A.1 Intrastat Report

441

A.2 EC Sales and Purchase List

459

A.3 Standard Audit File for Tax

460

B India

461

B.1 Tax Determination

461

B.2 Stock Transfers

463

B.3 Multiple Tax IDs

464

B.4 Official Document Numbering in Sales and Distribution

464

C North America

465

C.1 Jurisdiction Codes

465

C.2 Tax Codes

466

C.3 Tax Types

468

D The Authors

473