A checklist: Unifying global indirect tax returns in SAP S4/HANA Cloud

What is indirect tax?

As digitalization accelerates, the global tax landscape is becoming increasingly complex, especially for indirect tax compliance.  Indirect taxes, including value-added tax (VAT), goods and services tax (GST), and sales and use tax (SUT) in the U.S., are levied on the consumer as part of the purchase price of a good or service, but imposed on businesses to collect and remit to tax jurisdictions. Compliance requires companies to:

• Accurately calculate and collect taxes 
• Maintain proper records 
• File tax returns 
• Remit the taxes to the relevant tax authorities within the specified timelines (monthly, quarterly, annually) 

It also entails ensuring compliance with specific reporting and documentation requirements and staying updated on changes in tax laws and regulations that vary from tax authority to tax authority that may impact the business. In the U.S. alone, there are more than 26,000 tax jurisdictions and over 86,000 different tax rates and rules. Noncompliance with indirect tax obligations can result in financial penalties, legal consequences, and damage to a business's reputation.

For more information about SUT, check out our guide - "Understanding sales and use tax"

Indirect tax compliance challenges for multinational companies 

Global indirect tax compliance poses significant challenges for multinational companies, specifically navigating the complex and diverse indirect tax regulations across different countries. Each jurisdiction has its own set of rules, rates, and reporting requirements, making it essential for multinational companies to stay updated and ensure compliance in each location. Language barriers, cultural differences, and varying interpretations of tax laws further complicate the compliance process. Additionally, the rapid pace of regulatory changes and the introduction of new technologies create challenges in adapting systems and processes to meet evolving compliance obligations. Multinational companies must invest in robust tax technology solutions, establish effective internal controls, and engage local tax experts to overcome these challenges and ensure compliance with global indirect tax regulations.

Download this checklist to learn how you can unify your indirect tax compliance within SAP S/4HANA Cloud and gain transparency, save cost, and mitigate risk.