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CONTENT

1.  Why Tax risk & Scenario Analysis?

2.  Examples of deliverables

3.  The offering

4.  The Price

1.WHYVALUATIONOFTAXRISKANDREWARD?

•  Companies face many tax uncertainties and risks when making business decisions, e.g.

–  in tax litigation: should we litigate or settle in disputes with the tax authorities?

–  in mergers and acquisitions: is there a reasonable balance between tax risks and the price or guarantees?

–  in investment decisions: do we adeaquately price the tax risks into the business case?

–  in tax planning and structuring: do the tax benefits of planning and structuring outweigh the tax risks?

–  in discussions with the Non Executive Board: do we give relevant and efficient insight in the company’s tax risks, without digging into unnecessary and time consuming detail?

–  in strategy development: do we adequately calculate with the tax risks and rewards of our strategy?

–  in the annual accounts: how do we adequately value the tax risks in our accounts, without releasing confidential information?

•  For all these questions, VMW Taxand offers Tax Risk & Scenario Analysis, a service that provides companies with expected value calculations, tax risk valuation,

1.WHYVALUATIONOFTAXRISKANDREWARD?

•  This document provides three examples of Taxand project deliverables, i.e.

–  Example 1: Litigation support. The valuation of the uncertain outcomes of a court trial, enabling the comparison between settlement and litigation

–  Example 2: Structuring support. The valuation of uncertain taxes in a structured finance transaction.

–  Example 3: Transaction support. The valuation of uncertain taxes in two alternative ways to structure the acquisition of a target company.

EXAMPLE2LITIGATIONSUPPORT(1)

EXAMPLE2LITIGATIONSUPPORT(2)

EXAMPLE2STRUCTURINGSUPPORT

EXAMPLE2STRUCTURINGSUPPORT(2)

EXAMPLE3TRANSACTIONSUPPORT(1)

THEOFFERING

•  Taxand will work with your tax advisor (internal counsel, Taxand advisor or third party) to establish the factual and technical background of the position to be valued. Information is gathered through file review and/or a joint session or conference call.

•  The information will form the basis for a scenario analysis in which Taxand, together with the tax advisor, will establish the key variables driving the risks and rewards of the position to be valued.

•  Taxand will then analyse and model the scenarios and their outcomes with decision table modeling techniques and financial modeling techniques.

•  In co-operation with your tax advisor, Taxand will estimate the likelihood of the various scenarios and will return the overall confidence level of risks and rewards.

•  Taxand will quantify the risks and rewards, and - where relevant – will visualise the results in easy-to-read and easy-to-compare graphs, e.g.i a risk distribution histogram, waterfall graph, or tornado sensitivity chart.

THEPRICING

•  Feesarebasedon>mevalueanddependentonthelevelofaccuracyofthevalua>on.

•  Taxandwillmaximisetheefficiencyofthevalua>onbyregularyperformingsensi>vityanalysesthatavoidunnecessarymodeling.

•  Taxandwillalwaysgiveafeequote.

•  TaxandisoPenabletoprovidearelevantandinsighQulvalua>onfor€12,500($20,000)perposi>on,iftheposi>onhasalreadybeentaxtechnicallyanalysed,hasasingleyeareffectanddoesinvolvenomorethan16scenarios(asmanyposi>onsdo).Asimplemul>yearscenarioanalysisnormallycostnomorethan€17,500.

•  Togetafeelforthepricing:thefeeforthevalua>oninExample1was€17,500,andforExample2€12,500fortheoverallanalysisand€4,500foreachextraposi>on,sototalling1x€12,500+2x€4,500=€21,500.

•  However,complexposi>onswithmul>yearcorrelatedvariablesmayrequirecomlexdecisiontableandfinancialandMonteCarlosimula>onmodeling,whichmayrequiremore>meandeffortandthussubstan>allyhigherfees.Taxandwilladviseyouinadvanceabouttheneedandexpectedreturnofsuchmodeling.

KEY CONTACTS

16 Key Contacts

Rutger Hafkenscheid E: [email protected] D: +3120 301 66 33 M: +31 6 53 775 042

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