i104 - kpmg presents: navigating the complexities of ... · sap s4 hana in the public cloud •...

I104 - KPMG Presents: Navigating the Complexities of Indirect Tax in the SAP Public Cloud

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Fred BaumerKPMG Managing Director – State & Local Tax

Fred is a Managing Director in KPMG’s Transaction Tax Systems practice with over 19 years of experience in managing indirect tax technology projects.

Fred specializes in managing large scale projects for US based Fortune 500 high companies. Prior to joining KPMG, Fred managed IBM’s Indirect Tax Technology – integrating and sustaining indirect tax determination solutions.

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Sergio SilveiraSr Product ManagerONESOURCE ERP/Partners IntegrationsJoined Thomson Reuters via the acquisition of Softway in 2013. His current focus has been on improving/expanding ERP/Partners plugins and integration methods for ONESOURCE products like Indirect Tax Determination and Global Trade.

Sergio helped to start in 1996 the “Softway” company in Brazil developing Global Trade solutions and also adding ERP connectivity to them. He worked to create out-of-the-box plugins and also to certify them with ERP vendors like SAP and Oracle. He participated on the implementation of solutions integrated with customer ERPs in hundreds of multinational companies interacting with customer global ERP teams around the world.

5Sensitivity: Confidential

Confidential and Proprietary

Objectives slide• Understanding of the benefits of integration OneSource for indirect tax

determination in the SAP S4 HANA Public Cloud

• Considerations when planning your project

• Future plans for the integration



Agenda• What is SAP S4 HANA CLOUD (S4HC) • Why you need a tax engine• ONESOURCE S4HC Integration• Implementation Approach• Indirect Tax Touchpoints in the Procure to Pay & Order to Cash• Team Based Approach• Design Considerations• Questions



What is SAP S4 HANA Cloud (S4HC)“next-generation intelligent ERP”, built on SAP HANA and takes advantage of HANA's in-memory processing and real-time data accessibility, but makes this available in a SaaS (Software as a Service) model.



• Varying product and service taxability

• Special tax situations (tax holidays)

• Complex tax calculations (reduced base, tax on tax)

• Legal requirements & content for invoices

• Management of customer tax exemptions

• Rates & rules across multiple jurisdictions

• Wayfair v. South Dakota

• Industry complexities• Technology & Media• Construction• Industrial Manufacturing• Consumer Goods• Financial Services

• Manage sales tax over & under payments

• Purchase tax exemptions

• Business Process Complexity

• Sale Channels / Methods• E Commerce• In-App Transactions• Distributor Channels• EDI

• Non-Tax people making tax decisions

• Timely implement tax changes

Why you need a tax engine

Source KPMG



High-performing tax functions

• In today’s complex tax and business landscape, as expectations for transparency and real-time information sharing across jurisdictions becomes increasingly common, tax technology is emerging as one of the most important enablers of effective tax department design and delivery

• Indirect tax technologies have developed to help tax departments adapt to regulatory change, streamline processes, experience enhanced reporting and simplified data management, and enable effective collaboration across the tax department and beyond

People

Process/ Controls Technology

Source KPMG

10Sensitivity: Confidential 10


Days Sales Outstanding (DSO) & Open Invoices Tax can be an invoice payment issue

Customer experience and loyalty Incorrect tax hurts confidence Total customer cost and market competitiveness Tax can negatively impact your total price

Spend management Tax can diminish buying power and create

exposure Pay too much tax, hard to get back Fail to accrue tax and pay more in audit Incorrectly account for tax paid, pay too much tax

Growth and agility Inflexible and error prone tax technology slows

expansion and growth Miss market opportunity when slow or unable to

react to change

Tax judgements Incorrect tax can cause costly penalties & interest

in audit

Business efficiency Time & effort wasted in billing and procurement

processes

IT efficiency Time & effort to maintain tax, coding, and custom

reports

Indirect Tax Impacts



ONESOURCE – S4HC Integration • New integration designed and developed by Thomson Reuters specifically for integration with

SAP S4 Hana in the Public Cloud

• Designed to support the determination of sales & use tax in the United States over procurement, accounts payable and order to cash transactions

• Assigns jurisdiction codes to address master on business partners, cost objects, plants, sales orgs and company codes

• Leverages S4HC tax APIs using SAP iFlows and CPI to connect with ONESOURCE IDT 2019



ONESOURCE – S4HC Integration Thomson Reuters CloudSAP Public Cloud

Web

Ser

vice

s

TaxCalc WebSerivce

Custom Master Web Service or file based integration

ProcurementAccounts Payable

Financials

Service ContractsService OrdersSales Orders

Tax

API

Customer MasterProjects

DeterminationReporting

Data File IntegratorCert Manager

S4 In

tegr

atio

n

New Components

New Integration & User Interface

The integration component contains logic to translate the request from S4HC into a readable SOAP/XML format for OneSource and the output/response from OneSource into a readable SOP/XML format for S4HC.

It supports both tax jurisdiction determination requestsas well as tax calculation and audit calls



Implementation Approach

‒ Define Product Category mapping

‒ Identify source fields for tax decision drivers

‒ Assess data / process gaps

‒ Document tax dependencies on ERP integration

‒ Identify SAP configuration dependencies

‒ Review sales invoice design

Design Build Test DeployPlan

‒ Configure legal entities & registrations in ONESOURCE

‒ Install ONESOURCE S4HC Integration

‒ Assign jurisdiction codes to converted Master Data

‒ As needed, SAP Configuration and tax engine data mapping

‒ Plan customer exemption conversion process

— Develop test plans and test scripts

— Execute System Integration Testing

— Execute User Acceptance Testing

— Remediate testing issues

— Conduct go-live readiness review

‒ Prepare tax engine production configurations

‒ Support production environment Cut-over

‒ Prepare user training

‒ Final customer exemption certificate conversion

‒ User training/knowledge transfer for tax team

‒ Perform high-level tax automation definitions

‒ Define key data drivers, risks and benefits

‒ Review purchasing categories & taxonomy

‒ Tax invoice requirements

‒ Identify S4HC transactions in-scope

‒ Define tax requirements

KPMG Indirect Tax Expertise

Source KPMG



Procure to Pay – Sales & Use Tax Integration

GL Post AP

Purchase Order Invoice Verification

Tax Quotation Tax Calculation Tax Calculation & PostTax Calculation

PaymentGoods ReceiptsPurchase Request

Account Payable

Collect Vendor information

Set up vendor in SAP

Source KPMG

• Are any 3rd party systems integrated to S4HC for the P2P process?

• What type of purchase documents do you have planned for SAP and purpose of each?

• Will you implement Evaluated Receipt Settlement (ERS)?

• What is your delivery address logic? Is it sourced from Storage Location, Plant, Cost Center, etc.?

• Do you ever pick-up from your vendor’s location?

Considerations



Order to Cash – Sales & Use Tax Integration

Source KPMG

GL Post AR

Sales OrderProcessing

AR Invoice Created

Tax Quotation Tax Calculation Tax Calculation & PostTax Calculation

PaymentShippingQuote Invoice Finalized

Collect customer information

Set up customer in SAP Upload Exempt Cert

• Are any 3rd party systems integrated to S4HC for the O2C process?

• What type of sales documents are planned for SAP and the purpose of each?

• What invoices methods do you plan to utilize?

• How are materials defined and does this support tax determination?

• Do your customer’s ever pick-up from your location?

Considerations



Roles & Key Responsibilities

— Tax Project Management

— Tax Functional Leadership

— Business Process Analysis

— Tax Solution Design

— ONESOURCE Configuration

— Integration Testing

— Tax Test Planning

— Tax Knowledge Transfer

— Tax Engine integration License

— S4HC integration

— Technical Trouble Shooting

— Tax Testing Support

— Solution validation

— Installation of iFlows & enable CPI

— Develop transition plan for inflight transactions

— Technical Trouble Shooting

— As needed, SAP Configuration and data mapping

Assembling your project teamBring together the best of each solution element: KPMG’s tax functional expertise and Thomson Reuters technical integration utilizing SAP S4 Hana.

Advantages

— Fit for purpose insights, capabilities, resources, and accelerators across each project discipline

— Project plan, status reporting & issue / risk management approach

— Business-focused approach to a technology implementation

Source KPMG

SAP

HAN

A



Design ConsiderationsIn the design of the ONESOURCE and S4HC integration you’ll want to consider:

• Engaging tax early in the S4HC implementation to understand the SAP processes & transaction in-scope.

• Clearly defined purchasing and sales categories and the tax decision data drives across the business process from orders through indirect tax return will ensure indirect taxes are treated correctly and optimized where ever possible.

• Overpayments and/or underpayments of indirect taxes can have a profound influence on a company’s operations and financial performance.

Source KPMG

Questions?



Notice• Some or all of the services described herein may not be permissible for KPMG audit clients and

their affiliates or related entities.

• The following information is not intended to be “written advice concerning one or more Federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

• The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.

• The KPMG name and logo are registered trademarks or trademarks of KPMG International.

• © 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Source KPMG

Thank You

i104 - kpmg presents: navigating the complexities of ... · sap s4 hana in the public cloud •...

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