What is SAP Document and Reporting Compliance (SAP DRC) A Simple Guide for African Business

Africa’s Tax Season Is Changing — And Businesses Must Change With It

If you run a business in Nigeria, Kenya, Zambia, Egypt or South Africa, you’ve probably noticed something new happening. Across Africa, governments are moving away from paper invoices and manual tax filing. Now they want businesses to file invoices and tax reports electronically, sometimes in real time.

For example:

• E-invoicing is starting in Nigeria and the FIRS has already identified companies to help companies integrate their systems.
• In Kenya, eTIMS requires companies to keep electronic records and report sales.
• Zambia – ZRA Smart Invoice System
• Egypt has one of the most sophisticated e-invoicing systems in Africa, directly linked to the tax authority.
• South Africa will move toward full digital VAT reporting in a few years.

“This is a big change."Lots of companies are saying, 'How do we handle all this digital tax reporting without getting confused, without missing deadlines, without hiring 10 new accountants?

That's exactly what SAP Document and Reporting Compliance (SAP DRC) has been created to solve. Let's explain what it is using extremely simple language – something that we do here at Prompt Edify all the time for our African clients.

What Is SAP DRC?

SAP DRC is the digital assistant that operates inside the SAP system of the company. It has only one function: to help the business do whatever it needs to do.

SAP DRC Helps:

• Help create invoices and other business documents in an appropriate electronic format.
• Deliver them to where they need to be delivered: to the government tax portal, to the business partner, or to some certified third-party service provider.
• Prepare tax reports (for example, VAT declarations) in an appropriate format depending on the particular country.
• Track everything and inform you of the status of your documents: which have already been delivered, which are still pending, and which have been returned with some error.

In short:

SAP DRC is the one-stop SAP solution for all your e-invoicing, VAT/GST reporting, real-time tax reporting and other legal tax obligations anywhere in the world.

Significance of SAP DRC for Today's African Enterprises

This is precisely the problem that many enterprises in Africa face today. Suppose an enterprise runs its operations in three different countries, say Nigeria, Kenya and South Africa. Each of these countries has its own tax authority, laws, formats and deadlines. But without an effective solution, the finance department will be required to:

• Format invoices manually for each country.
• Manually upload these files into the respective government website.
• Find it difficult to establish whether a document was accepted or rejected.
• Fines for delayed or incorrect submission of documents.

SAP DRC offers an ideal solution to this problem. In essence, it provides an integrated approach in handling these countries hence eliminating the need to reinvent the wheel whenever there is a change in law of taxation in any of these countries.

Main Tasks Undertaken by SAP DRC

The SAP DRC solution consists of two main framework modules. They can be viewed as two departments operating in one company:

1. eDocument Processing

In the first framework, there is an electronic processing of the documents such as invoices and transport documents. After the creation of the sales invoice in the company, the document will go through formatting, validation, submission to the tax authorities or business partners, and approval in a secure way. The most important thing is that everything will leave a trace, and therefore when the tax auditor will ask something about a particular document, there will be proof of its current location.

2. Statutory Reporting

In this framework, there is preparation of the statutory reports including VAT declaration, profit and loss account, balance sheet, and sales list. The information will be gathered from the accounting documents of the company and then the reports will be created in the appropriate local format. Tax authorities will check and approve it before submitting. It minimizes possible errors that may occur during manual copying of the data from one document to another.

As stated by our DRC Consultant: "It comes as a shock to the companies when they realize the amount of time that the finance department is wasting on formatting once they look at the figures. All this time will be automatically put into development of the company starting from the moment when the process of eDocument Processing and Statutory Reporting become automated."

Example In Real-Time

Consider a firm which manufactures its goods in Lagos and sells its products to clients located in Kenya and Egypt. In relation to each sales invoice:

• For the invoice in relation to the client from Nigeria it will be prepared according to the FIRS e-invoicing process.
• For the invoice in relation to the client from Kenya it will be prepared according to the eTIMS of KRA.
• For the invoice in relation to the client from Egypt it will be prepared according to the e-invoicing portal of Egypt.
• All this is done via one SAP system without any manual input from the finance department. If there are any errors in the document, including absence of tax number, then SAP DRC will automatically spot this.

Why Should African Companies Care About It?

Implementation of digital tax reporting systems in Africa can only go upwards. Many government authorities of many countries will follow the same trend as that of governments of such countries as Egypt and Kenya. The companies that do not prepare themselves for the digital tax reporting will be facing the following problems:

• Late submission of reports.
• Mistakes made manually that lead to fines.
• Employees who work extra hours because of the complicated process.
• Unsuccessful entry into new African markets because of the different regulations.

Due to the usage of SAP DRC and other technologies, the firms will be able to adjust to new regulations due to the flexibility of the system. This is the reason why many African firms are collaborating with experts from Prompt Edify in order to avoid penalties rather than face them.

Connection of the Systems in Regards to Their Functionalities

[Architecture comprising SAP S/4HANA or ERP, SAP Business Technology Platform, and Tax Office]

For those who are interested in how it all works, here is the simple diagram:

• SAP S/4HANA or ERP does the statutory reports and eDocuments processing, which means that the invoices and tax documents are created from the internal company data.
• SAP Business Technology Platform (BTP) acts as the mediator and processes every document with the help of Integration Suite and SAP DRC Cloud Edition according to the format required.
• Tax Office receives the document, checks it, and sends the reply about the receipt or non-receipt of the document.

Secure and Compliant Exchange

Not a single one of the three systems becomes disconnected because of the secure and compliant exchange process, meaning that there is no risk of losing or delaying anything or sending something incorrectly irrespective of the African country whose tax authority it is.

Prompt Edify Director Mr.Anup says:

"Properly set up SAP DRC landscape is much more than avoiding any fines or penalties. This gives real peace of mind to the company's leadership since CFO can see everything that has been submitted and everything that is pending submission across all the countries at once on one screen."

Conclusion

SAP Document and Reporting Compliance is the system of choice when working with ever-changing requirements of the electronic invoicing and tax reporting. For the companies that operate in Africa and are faced with the challenges of the new digital tax environment of Nigeria, Kenya, Zambia, Egypt, South Africa and other African countries, SAP DRC offers one guarantee – the document will always be created and delivered in the proper format to the right destination.

The next blog will discuss SAP DRC configuration possibilities and user interface.

Ready for Compliance – the Intelligent Way?

Not slowing down are the tax authorities of Africa – those who will only be prepared at the last minute will face penalties, customer mistrust, and stress. The companies that succeed in the process of tax compliance are the ones which prepare in advance, in collaboration with the right partner.

Prompt Edify offers end-to-end implementation services of SAP DRC, including assessment, configuration according to country-specific regulations, go-live support, and compliance management of all markets where you are operating. If you are ready for digital tax compliance, or plan to implement SAP DRC in more African countries, we will ensure a seamless transition to SAP DRC for you.

If you need help with:

• SAP DRC Implementation of one or several countries
• SAP S/4HANA implementation or upgrade
• Other questions related to SAP Scale Services

Please get in touch with us at Prompt Edify today. Let us worry about compliance, and focus on growing your company in Africa.

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