SAP Document Compliance to meet legal requirements worldwide
A major challenge of doing business internationally is to comply with the local legal requirements in the countries, in which your business is active. In the past years, the number of legal requirements with the need to regularly submit electronic documents to a local tax authority, has increased significantly: examples are mandatory e-invoicing, VAT reporting, transport registration, e-accounting, etc.
The trend toward a “digital government” has shifted the emphasis away from optional to mandatory electronic tax compliance. All around the world, tax administrations are using technology more than ever before to collect and analyze more data from taxpayers, often in real time or near real time. Instead of being an optional “facility”, the use of e-invoicing is now a mandatory obligation in many countries, with severe penalties for non-compliance. Only more countries will follow with their own legal e-invoicing requirements.
All these regulations have their own processes and specialties, but the common factor is always the submission of a specific electronic document format. SAP saw the need to integrate all these country-specific legal requirements and their processes into one tool and have therefore developed their SAP Document Compliance solution for SAP ECC and SAP S/4HANA.
Alongside this SAP strategy, we at PIKON have set up a competence center of SAP experts that keep track of regulatory changes across multiple tax and reporting regimes all around the world. This unique combination of SAP expertise with in-depth knowledge of country-specific legal requirements makes it possible for us to make your SAP system compliant with all existing and upcoming legal requirements by means of a standard SAP solution.
How SAP Document Compliance makes your SAP ECC or SAP S/4HANA system compliant with legal requirements all over the world
SAP Document Compliance helps you stay ahead of the ever-changing compliance landscape anywhere you do business and helps you meet worldwide legal requirements, such as e-invoicing, transport registration, etc. This strategic platform is based on a generic eDocument Framework, which manages the creation and processing of electronic documents. These eDocuments are based on source data from business documents within your own SAP ECC or SAP S/4HANA system, such as invoices and delivery notes.
In order to comply with the specific requirements per country, SAP releases a Document Compliance country-specific SAP solution per legal requirement. This is built on the SAP eDocument Framework, transforms the transactional data into predefined exchange formats, mostly XML, and transfers this electronically to external systems, such as the systems of the local tax authorities.
SAP Document Compliance offers solutions for different types of requirements, like real-time e-invoicing (e.g. FatturaPA/ SDI in Italy, CFDI in Mexico), VAT reporting (e.g. SII in Spain) and transport registration (e.g. EKAER in Hungary).
The implementation of the SAP Document Compliance solution is a strategic decision to keep all existing and upcoming legal requirements under control from within your own SAP ERP system. Using a common platform to exchange eDocuments has the big advantage of being reusable for multiple countries using generic functionality. Because of that, SAP can respond rapidly to new and changing requirements. We at PIKON have the expertise and experience to support you with the implementation of your own SAP Document Compliance solution and to extend your existing platform with any upcoming legal requirement.
With its built-in eDocument Cockpit, SAP Document Compliance also offers a unified user experience for monitoring and managing the eDocuments that belong to the different countries all over the world. This overview cockpit makes it easy to track the current status and feedback from the local tax authorities.
How SAP Document Compliance works in ECC and S/4HANA
For each legal requirement, SAP releases a country-specific Document Compliance solution that is built on top of the SAP eDocument Framework and that uses two other key SAP Components: SAP Application Interface Framework and SAP Cloud Platform Integration:
- SAP eDocument Framework is a framework that is used to manage electronic documents, created by source applications in SAP ECC and S/4HANA. This framework provides the generic classes and transactions on which country-specific solutions are built.
- SAP Application Interface Framework (AIF) is used to map transactional data to the by the regulation required XML format and enables SAP Document Compliance to interface between source applications and SAP Cloud Platform Integration.
- SAP Cloud Platform Integration (CPI) is used as a communication platform to establish communication with external systems using web services. Pre-built end-to-end integration packages enable validations and authentication (digital signature), sending the eDocument to the receiver (tax authorities or the public administration) and sending the response back to the back-end system.
While the solution is built on these SAP components, usage of SAP Cloud Platform Integration is not mandatory for all solutions. It is possible to use the key functions SAP Document Compliance (eDocument Cockpit, mapping to source document to XML format, …) but do the communication to the tax agencies with an external middleware partner and connection of choice. PIKON can help your company set up the connection and integrate the middleware partner in your SAP Document Compliance solution without losing its benefits.
In the next example SAP Cloud Platform Integration is used as communication solution.
The process starts with extracting data from the relevant source documents – SD Billing, FI Invoice etc. – which are linked to a specific step of a business process. Along with the creation of a source document, SAP Document Compliance creates an eDocument in the country-specific solution. Using the eDocument Cockpit, these eDocuments can be displayed and submitted to the local tax authorities.
The submission of the eDocument triggers the creation of the country required document file, mostly an XML file, using SAP Application Interface Framework. For example, FatturaPA in Italy and xRechnung-UBL in Germany. This formatting is based on criteria, such as document type, tax information, and other master data. During the creation of the required document file, some basic checks are performed to see if all the required data is available in the source document.
The electronic document is then sent to SAP Cloud Platform Integration where steps related to security, authenticity and validation are performed. These steps are part of the country-specific integration flows. After this flow, the document is sent to the receiver. A response is received by SAP Cloud Platform Integration and forwarded to the back-end system where it is linked back to the eDocument. Within the eDocument Cockpit, the latest status or feedback of the eDocument can be monitored and required actions can be taken. In many cases, these responses contain information that must be included in subsequent documents, such as a unique transport identifier (EKAER) for transport registration in Hungary.
SAP Document Compliance In a nutshell:
- Generate eDocument based on source documents (e.g. SD Billing, FI accounting document, …) (SAP eDocument Framework)
- Map to the required output format using country specific solution (SAP Application Interface Framework)
- Communicate the electronic document to the tax authorities (Middleware partner/SAP Cloud Platform Integration)
- Monitor the status of the eDocument in the eDocument Cockpit (SAP eDocument Framework)
SAP Document Compliance is available for both SAP ECC and SAP S/4HANA with no major differences. Also, the country-specific solutions per legal requirement are developed for both systems. Migrating the SAP Document Compliance solution from SAP ECC to S/4HANA is a simple process provided by OSS notes.
Countries that are supported by SAP Document Compliance
SAP Document Compliance has already an extended list of supported countries and regulations. More solutions are being developed as the e-invoicing trend is being adopted by more and more countries. SAP focusses heavily on making the platform a one-stop shop for digital compliance with legal requirements all over the world.
SAP Document Compliance: list of countries that are available or in development* – Status August 2019
|Country-Specific Solutions for SAP Document Compliance||PEPPOL|
|Colombia||Hungary (e-Invoice + Transport Reg.)||Germany|
|Portugal (Transport Reg.)||Russia*||Australia*|
Your first steps into SAP Document Compliance with PIKON
Within our competence center for legal requirements, we have SAP experts that are on top of the SAP Document Compliance. Based on their project experiences on both functional and technical side of this solution, they can help you develop your own strategic roadmap for the implementation of SAP Document Compliance, so you can use it in every country, in which you are active.
With this, you will have a strategic standard SAP solution that makes your SAP system (ECC or S/4HANA) compliant with all the specific legal requirements in the countries, in which your business is active. Moreover, you will be able to monitor all these legal requirements from within one central future-proof solution within your SAP system. All related penalties for non-compliance are also avoided.
Please leave a comment or send me an e-mail at Tommy.Beckers@pikon.com to ask me your questions. I will get in touch with you as soon as possible and are looking forward to sharing our experiences.