In this video, explore direct tax reporting in an SAP S/4HANA system.
Direct taxes are taxes that are directly paid to the government by the taxpayer; therefore this type of tax is directly applied on individuals and organizations by the government. Examples of direct taxes are income tax, property tax, royalty tax, corporation tax, wealth tax, and so on. This is different from indirect tax which is imposed on a transaction such as sales or purchases of goods and services.
This video gives you quick insights into the Corporate Income Tax Framework in SAP S/4HANA and its features, which can be used for the calculation of direct taxes on the income of corporations. To support direct tax-related reporting requirements, the Corporate Income Tax Framework in SAP S/4HANA (CIT) can be used to meet country-specific tax reporting requirements.
This table shows the SAP Fiori apps, SAP Fiori roles, and business catalogs that needs to be activated in your system to support direct tax-related requirements.
You can use the previously mentioned SAP Fiori apps to manage these activities in the system.
Manage Corporate Income Tax Hierarchies app to configure classification rules.
Manage CIT Classification app to review and adjust assigned classification codes, reporting date, and amounts.
Manage Settlement Rules app to configure settlement procedures using different arithmetic operations and conditions on selected classification codes using the BRFplus workbench.
To work with this framework, you can group the SAP Fiori apps under a group such as Corporate Income Tax Framework.
In summary, SAP S/4HANA and SAP Fiori offer the following benefits for direct tax reporting.
Use of SAP Fiori apps to manage classification of journal entry items for direct tax calculation.
Use of generic corporate income tax (CIT) report in SAP Document and Reporting Compliance for SAP S/4HANA with statutory reporting to support real-time reporting based on CDS views.
For more details on using the generic CIT report in SAP Document and Reporting Compliance for SAP S/4HANA, you can refer to SAP Note 3092903 – DRC Generic Corporate Income Tax Implementation Leading Note. This report uses report category GENC_ CORPORATE_INCOME_TAX. SAP Note 3092903 provides additional details on dependencies and activation requirements.
CIT Framework is the next-generation reporting platform provided by SAP that can help corporations plan the digital transformation of corporate income tax calculation and its reporting in SAP S/4HANA. This framework is equipped with state-of-the-art features that can be used to perform legal reporting globally by utilizing and building on the technical architecture of SAP S/4HANA.
This framework has three key parts:
This feature allows you to create classification codes using general ledger accounts and other journal entry fields, assign them to journal entry items, and then include these classification codes in your reports.
This feature allows you to perform additional calculations on the classified journal entry items based on your settings and then include these calculations in your reporting.
This feature allows you to create reports based on CIT Framework data using a generic CIT report offered by SAP Document and Reporting Compliance for SAP S/4HANA.
With the use of these framework components, you can meet direct-tax relevant reporting requirements within SAP S/4HANA.