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      For SAP ERP users, the deadline for migration to S/4HANA is looming. With support for older versions of SAP ending in 2027, ERP transformation is high on businesses’ agenda.

      This presents tax leaders with a one-off opportunity to futureproof their operations.

      As they’re all too aware, their businesses are having to transform in response to geopolitical shifts, new business models and ways of working, and the impact of generative AI.

      In the tax world, meanwhile, authorities’ requirements for greater transparency, real-time reporting, e-invoicing and BEPS Pillar 2 compliance are driving a need for data to be right first time. With less resource available to them, tax teams are relying on technology to cope with the demands of a changing world.

      Any business transformation is underpinned by digital transformation. For businesses using SAP, the move to S/4HANA is a chance to modernise the organisation – and with it the tax function.

      Rizwana Tahiri
      Rizwana Tahiri

      Director, Global Compliance and Transformation, Tax & Legal

      KPMG in the UK

      Defining the recipe for success

      If your organisation is migrating to S/4HANA (or considering any ERP overhaul), now’s the time to consider hardwiring tax requirements into the programme.

      In most ERP implementations, tax is an afterthought: it doesn’t typically get factored in. You’ll need to secure a seat at the table, and make the case to your IT and finance colleagues for tax transformation within the firm’s wider digital transformation.

      As I set out in a previous article, the best way to do so is to convey the value, risks and efficiencies at stake. Attempting to reverse-engineer tax functionalities into a live ERP system will prove difficult, cumbersome and expensive. And it’s likely to heighten the risk of compliance failures.

      Having made the case, follow these five steps to integrate tax into the firm’s ERP migration:

      • Understand the programme

        Clarify its objectives, approach, milestones and design principles. Use structured discovery workshops, stakeholder interviews and programme charters to align stakeholders on the vision and delivery roadmap.

      • Design your data model

        Ensure your universal journal acts as a single source of truth, by establishing robust data governance, validation rules and harmonised data structures from the outset.

      • Define your parallel accounting approach

        Develop and implement parallel and tax ledgers early on. Use the relevant SAP configuration options, and align your finance and tax leads on ledger use cases and compliance requirements.

      • Set out your tax technology strategy

        Define your approaches to:

        • e-invoicing: build scalable, compliant frameworks in line with local mandates.
        • real-time tax reporting (incl. BEPS Pillar 2): integrate real-time engines, and map data flows, to meet global transparency requirements.
        • tax data management: standardise, consolidate and harmonise your tax data, using centralised platforms and master data controls.
      • Implement cross-functional integration

        Position tax as a cross-functional enabler by:

        • embedding it into programme governance.
        • making sure it’s represented in design forums.
        • mapping the interdependencies between finance, IT and operations.

      Bringing tax into an ERP upgrade or implementation is a complex and highly technical exercise. You’ll need to work with an expert partner, who can bring an in-depth understanding of ERP technology and tax compliance.

      KPMG can support your programme end-to-end. We’ll support you as you make the business case for tax transformation. We’ll help you design your global ERP solution with a local lens, and land on the right key design decisions. And we’ll embed your tax requirements into your new ERP environment.

      Please get in touch to ensure your S/4HANA migration leaves your tax function fit for the future.

      Transform tax with KPMG.

      Our tax insights

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