transform today for the challenges of tomorrow plenary

Transform today for

the challenges of

tomorrow

Plenary

Maison de L’automobile15 December 2015

Andre Claes – Partner, Deloitte BelgiumMark Kennedy – Partner, Deloitte UKPatrick Joucken – Partner, Deloitte Belgium

1

Introduction

Transformation – why?

Transformation – what and how?

Conclusion

Contents

"Everything that can be

invented has been invented”

Charles Holland Duell c1899

US Commissioner of Patents

Transformation?Introduction





Thomas Watson 1943

President of IBM


Bill Gates

Chairman and CEO of Microsoft






Thomas Watson 1943

President of IBM

“When we set the upper limit of PC-DOS at 640 KB,

we thought nobody would ever need that much memory”

http://en.wikipedia.org/wiki/File:Bill_Gates_July_2014.jpg

http://en.wikipedia.org/wiki/File:Bill_Gates_July_2014.jpg

6

Transform today for

the challenges of

tomorrow

Transformation –

why?

Transformation why? External trends are impacting Tax …

As business GLOBALIZES … so do tax

obligations together with a pressure for

centralized global delivery

TECHNOLOGY proliferation … fuels

expectations for wholesale process

change, and becomes a catalyst for re-

engineering tax

Transformation of REVENUE

AUTHORITIES … the way they go about

their work

Increased REGULATION makes business

more complex but also more transparent

... raising risk and enabling mainstream

media coverage

TALENT … new skills are needed and

there is a new environment within which

to attract and retain people

New STAKEHOLDERS … have emerged

and we are confronted by a new era of

socially responsible tax

8

New practices

and regulations

• Control powers of tax authorities

• Targeted transfer pricing audits

• Large companies Auditing Centres

• Parliamentary Commission on serious

Fraud

• Generalised electronic filings

• Increased Digital Data requests

• Transparency: exchange of tax rulings

The story so far

9

OECD’s Base Erosion & Profit Shifting study

The European Response

State Aid

Tax Rulings: automated exchange

Action Plan on Corporate Taxation

Unilateral measures

International response

10

• More taxes and more reporting in more jurisdictions

• Evaluate the impact of change on tax operations

• Modelling the impact of new measures

• How? New management processes & tools

• When?

What does it mean?

11

The Global Tax Reset & BEPS

12

Global Tax Reset: the changing world of tax

The Global Tax Reset is bringing in a new era of

international tax, with an emphasis on transparency,

consistency and sharing of information between tax

authorities. This paper discusses the forces driving

significant change to the international tax landscape,

as well as key areas of business impact and

resulting challenges.

About BEPS and FAQs

The OECD’s Base Erosion and Profit Shifting actions

are well underway with proposals and consultations

on all actions. Change is coming. These pages will

help businesses navigate what is happening, key

deadlines and issues they might want to consider.

Articles, briefings and discussion papers

The OECD’s Base Erosion and Profit Shifting actions

are well underway with proposals and consultations

on all actions. Change is coming. These pages will

help businesses navigate what is happening, key

deadlines and issues they might want to consider.

News & updates

Visit Deloitte tax@hands for tax news and updates on

BEPS and other issues driving the global tax reset

Dbriefs webcasts

Dbriefs Webcasts feature our professionals discussing

critical issues that affect your business.

Country-by-country reporting (CbCR)

This perspective paper aggregates frequently asked

questions by business leaders about Country-by-

country reporting (CbCR), a requirement detailed in

Action 13 of the OECD's BEPS guidelines, and is

intended to help companies understand what CbCR

is, what information is needed, who CbCR applies to,

and how businesses can prepare.

BEPS Actions

There are 15 BEPS Actions that are currently being

considered and worked on by the OECD. For each of

the Actions, there are factors to consider such as the

timing, impact and potential impact on policy. The

OECD/G20 has set a number of deadlines to

conclude on the BEPS Actions.

G20/OECD Timeline

An overview of the information and documentation

that has been released by the OECD during the

course of the BEPS Action Plan, together with

relevant Deloitte or third party content and

commentary. As well as containing details of all of

the releases to date, the timeline shows what is

expected over the coming months, in accordance

with the schedule published by the OECD.

http://www2.deloitte.com/global/en/pages/tax/topics/base-erosion-profit-shifting.html

13

Transform today for

the challenges of

tomorrow

Transformation –

what and how?

Tax transformed – the “professionalisation” of tax

14

People and

organisation

Processes

Systems

Tax Risk Management

Risks

ControlsTest

Report

Tax Policy Framework

Risk

appetite

Decision

making

Control

standards

Oversight

KPIs/KRIsCulture

and

ethics

Accountabilities

Tax Vision, Goals

and StrategyTax Outputs and

Communication

15

Tax policy,

risk and operations

Increasing formalisation of tax policy

16

Accountabilities for taxes getting clearerGroups are increasingly defining their tax policy

Source: Deloitte Global Market Research, 2014

47%

29%

23%No

Yes, for some areas

Yes, for all four areas

Answering key questions

17

People and

organisation

Processes

Systems

Tax Risk Management

Risks

ControlsTest

Report


Risk

appetite

Decision

making

Control

standards

Oversight

KPIs/KRIsCulture

and

ethics

Accountabilities

Tax Vision, Goals


Communication

“How is success

measured?”

“How are key

decisions made?”

“Who owns each

tax?”

“What governance

is there over tax?”

Identifying, controlling and reporting tax risks

18

Groups generally have processes for

identifying, controlling and reporting tax risk

More and more third parties have a specific

interest in tax risks and how they are managed

• Tax Authorities – e.g. UK,

Australia, Netherlands, Japan,

Spain

• International bodies – e.g. OECD,

EU Commission

• The Press

• Investors – e.g. Local Authority

Pension Fund Forum

• Analysts – e.g. Schroders, Citi

• Indices – e.g. Dow Jones

Sustainability Index, MSCI World

• NGOs – e.g. Tax Justice Network,

Action AidSource: Deloitte Global Market Research, 2014

Developing a risk-based approach

19

People and

organisation

Processes

Systems

Tax Risk Management

Risks

ControlsTest

Report


Risk

appetite

Decision

making

Control

standards

Oversight

KPIs/KRIsCulture

and

ethics

Accountabilities

Tax Vision, Goals


Communication

“How do we report to

the Tax Committee?”

“What are our key

tax risks?”

“Who are our ‘lines

of defence’?”

“When is Internal

Audit testing tax?”

20

Compliance

operating models

Global tax operating models

21

Increasingly centralised decision-making

22

Global tax operating models: past, present and future

Source: Deloitte Global Market Research, 2012 and 2014

Pressure for continuous improvement

23

Satisfaction (% happy) with current model by driver and method

Source: Deloitte Global Market Research, 2014

Evolving the operating model

24

“Do we have the

right scale, roles,

locations?”

“Can we streamline

adjacent

processes?”

“What is the right

in/out/co-source

model?”

People and

organisation

Processes

Systems

Tax Risk Management

Risks

ControlsTest

Report


Risk

appetite

Decision

making

Control

standards

Oversight

KPIs/KRIsCulture

and

ethics

Accountabilities

Tax Vision, Goals


Communication

“Can we leverage

our Shared Service

Centres?”

25

Tax technology

Tax Department is a large consumer of data

26© 2015 Deloitte Belgium

Complexity of Tax Technology Landscape

27

© 2015 Deloitte Belgium

Tax transformation framework

28

Str

ate

gy a

nd

ex

ec

uti

on

Reg

ula

tory

co

mp

lia

nc

e

Cas

h t

ax

an

d p

aym

en

t m

an

ag

em

en

t

Clo

se

, p

rovis

ion

, a

nd

pro

ce

ss

Ta

x b

us

ine

ss

pla

nn

ing

Ris

k a

nd

ta

x c

on

tro

ve

rsy

Global direct tax

Global indirect tax

Accounting for tax (provision) People and

organization

Technologyand systems

Processand policy

Data and information

Enablers

Value drivers

29

Conclusion

Main points?Conclusion

1. Policy, Risk and Operations

2. Compliance Operating models

3. Technology

Interconnections – Change management – Communication

30

Agenda of the dayConclusion

31

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities.

DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see

www.deloitte.com/about for a more detailed description of DTTL and its member firms.

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member

firms in more than 150 countries and territories, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most

complex business challenges. Deloitte’s more than 200,000 professionals are committed to becoming the standard of excellence.

This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte

Network”) is, by means of this communication, rendering professional advice or services. No entity in the Deloitte network shall be responsible for any loss whatsoever sustained

by any person who relies on this communication.

© 2015. For information, contact Deloitte Touche Tohmatsu Limited. 32

Transform today

for the challenges

of tomorrow

Operational

Transfer Pricing

1


Maria Panina – Senior Director, Deloitte BelgiumThierry chaumantin – Senior Manager, Deloitte Belgium

1. Definition

2. Issues & Challenges

3. Solution Framework

4. Implementation & Monitoring – SAP example

5. Summary

Contents

1. Definition

3

Definition

People, Processes and

Technology employed to

ensure that chosen

business model and

transfer pricing policies are

ultimately reflected in its

books and statutory returns

Transfer pricing policy

Operational TP Monitoring Implementation

Documen-tation

2. Issues &

Challenges

5

• TP policy not shared within the organization

and / or not properly followed in practice

• Unclear roles and responsibilities: tax team

often not aware of altered IC transactions

• Disconnect between tax department & other

business departments

• A complex and fragmented architecture with

multiple (ERP) systems

• A wide variety of GAAP and accounting

systems

→ No standardized chart of accounts

• Reliance on a large number of spreadsheets

(highly manual, prone to error)

• No possibility to split P/L per function / profit

center / transaction / ...

• Inconsistent definitions of P/L elements

• Limited ability to monitor and adjust global

pricing on a monthly or quarterly basis

→ Substantial year-end adjustments (creates

awareness at the level of the authorities)

• Potential impact on tax (management), both

direct taxes as well as indirect taxes

Issues & Challenges

3. Solution

Framework

7

Technology

Process

People

Data collection is

complete and

accurate

Policies are

properly translated

into practice

Calculations and

adjustments are

automated and accurate

Audit status is visible

on a global basis

Reporting and

requirements are identified

and fulfilled locally

Policy or calculation

changes effected on a

timely basis

How do you get there – some key considerations?

• Who are the people involved in process – are they the optimum people; do they understand their part

in the process?

• Do those involved have clearly defined roles and responsibilities?

• How are training and legislative updates handled?

• Are key responsibilities understood and allocated to the right people?

• How frequently would the business like the calculation/true-up process to be run in an ideal situation

(as part of each month end close / quarterly / bi-annually / annually)?

• Where should the different elements of the end-to-end process be run (usually Finance/Tax/Business

split)?

• What controls should be in place to counter key risks? How are the controls going to be monitored?

• What technology is used currently to support the people and processes?

• How suitable is that for the complexity and / or risks of transfer pricing within the business?

• Have all technology options been considered given the significant advances in recent years?

• What level of automation is optimum for the business?

Priorities

Solution Framework – Key considerations

People: Clear definition of Roles & Responsibilities

• TP policy design

• TP documentation

• TP policy defence

• Financial reporting to Tax

• MIS reporting to Business

• Legal entity reporting

• Implementation

• Data gathering

• Monitoring

• Identifying changes of facts

TP Policy Implementation

processMonitoring Documentation

Tax

Finance

Business

Operations

Legal

Treasury

IT

Board

Budgets:Segmentation by products,

flows and legal entities

Available financial data may be insufficiently segmentedTP policies

Calculation of

Adjustments

Adjustments need to be

allocated across multiple cost

centers or SKUs

Price lists: 1000s SKUs

and discounts

Statutory results

Adjustments need to reflected in statutory financials so results correspond to the TP policy

Update of budgets

Automation

Processes (and data) - Implementation

Considerations

• Indirect Tax & Customs Valuations on

individual product invoices.

• WHT implications of a true-up

payment not linked to specific product

invoices.

• Resources and system capability

required to undertake the adjustment.

• Acceptance of lighter-touch process

in certain jurisdictions.

Processes– Monitoring

Adjusting books before year end close is a critical component of ensuring

compliance

4. Implementation

& Monitoring

on SAP

12

A combination of SAP modules can be used to effectively implement and monitor

the TP policy

BPC: Budgeting Module - Determine transfer price by product

family based on budget P&L and target Profit Level Indicators

(PLIs)

SD: Pricing Module – Configure transfer price by product

family using appropriate TP mechanism (e.g. cost plus, re-sale

minus) and generate intercompany billing invoices

FICO (COPA): Controlling Module – Analyse PLI variances and

determine transfer price corrections (TP true up adjustments or

transfer price update)

TP policy: implementation & monitoring on SAP

Steering PLI according to TP Policy on SAP

• These 4 steps will help you to

dynamically steer the PLIs (e.g. OM,

NCP) within the fiscal year according to

the TP policy via:

• Accurate determination of Transfer

Price by product family at Budget time

• Adequate implementation of TP

mechanism (e.g. cost plus for

manufacturer, re-sale minus of

distributor) at invoicing time

• Dynamic re-calculation of transfer

price based on actuals & re-

forecasted numbers at Quarter Close

time© 2015 Deloitte Belgium 14

Pricing setupSAP SD

Budgeting solutione.g. SAP BPC

Profitabilityanalysis

SAP CO-PASales orderprocessing

SAP SD

Per

product

family

1 2

34

1.Budgeting & Transfer Price Determination

• Budget input

During the budget exercise, OPEX, sales

and cost of sales quantities and prices

will be loaded in the system by the

business teams

• PLI computation

Based on the data entered, the

budgeting tool will compute the PLIs by

legal entity/function

• Transfer Price margin calculation

PLI can be iteratively refined by adjusting

the percentages in the budget tool (cost

plus, re-sale minus) to reach the target

PLI (OM,NCP) by legal entity/function© 2015 Deloitte Belgium 15

Pricing setupSAP SD




SAP SD

Per

product

family

1

2.Transfer Price Configuration

• Standard costs and list prices

Standard costs and list prices are stored

per product (and e.g. customer)

• Transfer price margins

Each transfer price margin (cost plus %,

re-sale minus %) will be stored per

product family/period as a pricing

condition

• Pricing procedure (TP mechanism)

Pricing procedures are defined to apply

TP mechanism (e.g. intercompany cost

plus % on standard cost or intercompany

re-sale minus on list price)

© 2015 Deloitte Belgium 16

Pricing setupSAP SD




SAP SD

Per

product

family

2

3.Intercompany invoicing

• Intercompany invoices can be

automatically generated according to the

TP mechanism (pricing procedures) defined

• Dynamic calculation – unit price

variation

The pricing procedure can take into

account variation in unit price such as:

• Change to the list price

• Customer discount

• Inventory valuation (e.g. flash title sales

vs. sales from distributor replenishment

stocks) © 2015 Deloitte Belgium 17

Pricing setupSAP SD




SAP SD

Per

product

family

3

4. Transfer Price Controlling (*)

• Analyze Actual PLI (OM, NCP) by segmented

P&L (legal entity/function)

Compare actual vs. budget, break-down GM by

product family, identify variance origin (volume,

unit price)

• Determine Transfer Price adjustment

Combine actual YTD plus remainder of the year

forecasts. Determine transfer price adjustment

by product family (% of cost plus or re-sale

minus) to reach target PLI for the fiscal year

• Implement Transfer Price adjustment

Either via transfer price update in SD (adjust %

of cost plus or re-sale minus) or via posting of

TP true-up adjustments (generate credit

note/debit note)© 2015 Deloitte Belgium 18

(*) Combined usage of COPA & BPC to get full picture

actual & budget/forecast numbers

Pricing setupSAP SD




SAP SD

Per

product

family

4

Operational TP on SAP – Key considerations

• Budgeting module does not need to be

SAP BPC

Other budgeting tools like Oracle Hyperion,

IBM Cognos TM1, Anaplan can also support

this process.

• TP on services (cost re-charges) can be

addressed in a similar manner

Allocation table in the budgeting system

and/or SAP FICO. To apply allocation drivers

to cost centers.

• Transfer price update & forecast process

Updating transfer price on pricing module

during fiscal year to reach target PLI based on

the actuals and the updated forecast


Pricing setupSAP SD




SAP SD

Per

product

family

6. Summary

20

Solution Framework- The Building Blocks

Master File

Legal structure, business

area, intangibles, financial

activities, financial & tax info

Local Files

Local mgmt. info, org chart,

intra-group payments,

financial data for arms

length calcs., APAs

Operational Transfer Pricing

Tax FinanceSupply

ChainLegal

Other

Board, IA

People

Organisation

Stakeholders

Process

Technology

Systems

and data

1.

3.

2. ITTreasury

Risk, controls and governance

Strategic objective

setting

Workflow

Reporting

• Country by country

reporting

• Tax return information

• Internal stakeholders

Analytics and

monitoring

• Validation of policy

operation

• Value-added analytics

and insight

Policy determination

Policy documentation

Audit defence

• Audit defence

approach

• Process / workflow

• Feedback and update

Economic analysis and initial

documentation

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms.

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries and territories, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte’s more than 200,000 professionals are committed to becoming the standard of excellence.

This communication is for internal distribution and use only among personnel of Deloitte Touche Tohmatsu Limited, its member firms, and their related entities (collectively, the “Deloitte Network“). None of the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this communication.


Transform today for

the challenges of

tomorrow

The new Union

Customs Code


Dries Bertrand – Senior Manager - Deloitte BelgiumAlexander Baert – Attorney-at-law - Laga

1

Introduction

Introduction of Union Customs Code / Transformation – why?

How does this impact your GTM systems & tools / Transformation – what?

Transform today for the challenges of tomorrow – how?

Conclusion

Contents

D. Bertrand & A. Baert - The new Union Customs Code requires new system changes - TMC Conference - 24 November 2015 2

3

Introduction of

Union Customs

Code

Transformation –

why?

From CCC to MCC to……UCC


• Community Customs Code (CCC) and its Implementing Provisions (CCCIP)

• Regulation 2913/1992


• Modernised Customs Code (MCC)


• Goals: Rationalisation, Standardisation, Simplification, Computerisation, Interoperability,

New facilities.

• The Union Customs Code (UCC) package


• Delegated Act – approved by the EU Council and Parliament

• Implementing Act – under discussion

• Publication of both acts expected in the Official Journal in

December 2015

• Entry into force 1 May 2016 and full implementation, using all

simplifications and IT applications by the end of 2020

Aim of the UCC


Facilitation of legitimate trade

Reinforced need to ensure security and safety

Paperless environment for customs & trade

Harmonized & standardized application of customs controls

UCC will modernize

customs and is the

new framework on

the rules and

procedures for

customs throughout

the EU

General overview of potential impact of the UCCAuthorized Economic Operator

Classification

Origin

Customs ValueCustoms Debt &

Guarantees

Customs Regimes

Simplifications & IT environment

UNION CUSTOMS CODE


© 2015 Deloitte. Private and confidential.

UCC Projects Timeline


UCC Projects related to electronic systemsTarget date of

deployment

S1

2017

S2

2017

S1

2018

S2

2018

S1

2019

S2

2019

S1

2020

S2

2020

1. UCC Registered Exporter System (REX) 01.01.2017

2. UCC Binding Tariff Information System (BTI) Update - Phase 1 01.03.2017

2. UCC Binding Tariff Information System (BTI) Update - Phase 2 01.10.2018

3. UCC Customs Decisions 02.10.2017

4. Direct trader access to European Information Systems

(Uniform user management & digital signature)02.10.2017

5. UCC Proof of Union Status (PoUS) 02.10.2017

6. UCC AEO updates 01.03.2018

7. UCC New Computerised Transit System (NCTS) update 01.10.2018

8. UCC Surveillance 3 02.10.2018

9. UCC Automated Export System (AES) 01.03.2019

10. UCC Information Sheets (INF) for Special Procedures 01.10.2019

11. UCC Special Procedures 01.10.2019

12. UCC Notification of arrival, presentation notification and

temporary storage02.03.2020

13. UCC Centralised Clearance for Import (CCI) 02.10.2020

14. UCC Guarantee Management 02.10.2020

15. UCC Safety and Security and Risk Management TBD

16. UCC Classification (CLASS) TBD

Staged

approach of

implementing IT

projects /

solutions

8

How does this

impact your GTM

systems & tools

Transformation –

what?

Example of potential impact of the UCC

EUROPEAN UNION/SWITZERLAND

India

3. Origin (BOI)

2. Classification (BTI)

I

ME

X

4. Customs Value

5. Customs Clearance

6. Customs

Debt

7. Special Procedures

USA

8. Simplifications and IT

systems

1. Authorized Economic Operator


Customs & Global Trade IT processes

CGT processes need to mapped, put in SOPS and build into technology. The complexity with customs & global trade

processes is the ‘real time’ transactional match between financial data and logistics data where content constantly

needs to be up to date. Economic operators lack such environment and have no or limited governance models in place

10

Conversion

provider

ERP

(SAP ECC6)

Feeder

Systems• Sales and Distribution

• Materials

Management

• Logistics Execution

• …

Au

tho

rities

Cu

sto

ms

/VA

T/S

tati

stic

al…

GTM technology

Master

Data

Master Data*

Trans. Data

D. Bertrand & A. Baert - The new Union Customs Code requires new system changes - TMC Conference - 24 November 2015

Global trade master data – UCC impact

11D. Bertrand & A. Baert - The new Union Customs Code requires new system changes - TMC Conference - 24 November 2015

Master Data Management

Business Partner

Customers

ProductBill Of

Material

Product data

Banks

Duty RatesBOM

Exchange Rates

Customs codes (HTS/CN Code)

Licenses

Import/Export Licenses

Vendors

Rates

Economical Origin

Preferential Status

License Rules

Letter of Credit

Classification

Origin

SPL List

Export Control Codes

(ECCN/ECN/ ITAR)

ERP

ERP/Global Trade

Global Trade

Product values

Global trade functionalities – UCC impact


Excise warehousing

FTZ/ Bonded

warehousing

Customs

Processing

Brokerage / e-filing

declaration model

Product

Classification

Product

Classification

Export License

Screening

Import License

Screening

Embargo

Screening

Black List

Screening

Certificate

Management

Preference

Determination

Supplier Declaration

Handling

Letter of Credit

Intrastat reporting

Country of Origin

OGA management

Regulatory

management

Customs

management

Special

regimesPreference

management

Other trade

compliance

Duty Drawback

The Four Keystones of CGT management


Processes & Procedures• Service provider management• Customs filing• Applying for licenses• License reporting• Agreements reporting• Mergers and acquisitions advisory• End-use research and assurance management• Anti-boycott research and assurance

management• Training

People & Organization• Leadership and commitment• Policies definition and management• Culture of awareness• Global regulatory knowledge• Regional regulatory knowledge• Technical regulatory knowledge• Systems and tools proficiency• Cross functional collaboration

Technology• Restricted party screening• Embargo screening• End-use screening• Anti-boycott screening• Classification management• License management• Free Trade Agreements management• Import/Export filing• Trade document generation• Broker integration• Records retention• Metrics and reporting• Workflow and rules

Data Management • Master data management• Data quality management• Global trade content• Restricted parties/entities• Embargo lists• Classification data• Systems role definitions• Data tagging• Data access policy management• Metrics and reportingTechnology

Processes

&

Procedures

People &

Organization

Data

Management

14

Transform today for

the challenges of

tomorrow

Transformation –

how?

Summary – Points of attention


01

02

03

04

05 Internal and external processes and relationships are in

scope

Processes will need to be reconsidered from a financial

point of view

Compliance procedures will need to be reassessed

Master data will need to be reassessed

Only 6 months to go to have a number of key processes,

authorizations, systems and control changes in place

What do you need to do?

• 1 May 2016 will be here soon

• A thorough assessment of the

impact of the UCC is necessary

• A project plan & strict timeline

must be drafted in order to

implement the changes of the

UCC in a strict and concise way


Way forward


Unlocking the

potentials of the UCC

while being/growing

compliant

UCC

OPPORTUNITY

SPOTTING /

RISK

MITIGATION

AWARENESS

&TRAINING

ADAPTING PROCESSES &

PROCEDURES

Thank you

Q & A


Fernand Rutten, Partner, Customs & Global Trade, Global lead, +32 2 600 66 06 or [email protected]

Dries Bertrand, Customs & Global Trade, Senior Manager, +32 2 600 66 76, [email protected]

Alexander Baert, Attorney-at-law, Laga, +32 2 800 71 51 or [email protected]

mailto:[email protected]



Transform today

for the challenges

of tomorrow

Centralized VAT

compliance

Christophe De Waele - Deloitte

Sabine Boone – Deloitte

1

• The Current Landscape

• The Push to Centralisation

• Components of Compliance

• Focus on Technology : The SMART example

• Executing on strategy

Contents

In Deloitte’s 2014 indirect tax client

survey, our clients identified indirect tax

compliance as their number 1 priority

area.

Only 30% of respondents to our global

compliance survey were happy that their

centralised compliance processes were

efficient.

The current landscape

4

Pressures on indirect tax teams

VAT is a big number

Imposed risk managementregimes such as SAO

Public scrutiny and boardroom attention

Behaviour-based penalty regimes

Desire to “do more” withthe same resources

New resourcing and deliverymodels, such as SSC/GBS

Increasingscope of‘indirect’

taxes

More to manage alongside greater scrutiny over performance and compliance

The tax

team

Operating model evolutionThe evolution of compliance strategy from discrete functional-

and country-based models to integrated, global and cross functional services

Limited automation Medium automation

Sharing of tools and processes

Global

Maximum automation

One function Multi-function

Little sharing Full integrationCo-location

Transactional and advisory

Local Regional

Two to three functions

Transactional

SSC geographical scope

Degree of automation

Functional scope

Degree of functional integration

Degree ofvalue add

Outsourcing model Decentralized Coordinated, consolidated Centralized, Integrated

Prepared by separate local country teams

With ad-hoc use of advisors on country by country basis

Tax and statutory accounts processes aligned

Co-ordinated global outsource working with SSC

Shared service team prepares tax returns and statutory accounts

Local support for quality assurance and specialist input

Tax and statutory accounts

Operating model

7

The push to

centralization

Market research - Compliance focus

Relative importance of factors in %

Current global compliance drivers for organisations and their management

* Global CRS Transformation survey conducted by Deloitte – December 2014


(% Happy)

Satisfaction with the current model for managing global compliance

Delivered and

managed locally

Delivered locally,

managed centrally

Delivered and

managed

centrally

Method 1

Decentralised

Method 2

Co-ordinated

Method 3

Centralised


21% 14%7% 5%

Indirect taxreturns and payments

Global taxprovision

Statutoryaccounts

Corporate incometax returns and payments

Specific issues…

Does not perform as well for…

• Lack of control; monitoring; management

• Complications of local knowledge

• No central strategy


• Lack of communication from external partners

• Lack of skills/ expertise


• Less focus on these areas

• Problems with data collection/ integration


• Lack of communication from external partners

• No central strategy

• Lack of skills/ expertise

Satisfaction with the current model for managing global compliance

Market research - Key messages

• More centralised operating models

being deployed but the degree of

‘enthusiasm’ varies by process

• Increased use of selective outsourcing to

complement the in-house team and as a

catalyst for wider improvement or even

transformation

• The focus is now on more consistent

global processes and quicker, simpler

delivery, often through the better use of

technology

Components of

tax compliance

12

The components of centralising compliance

People Knowledge Processes Technology

Local expertise

Centralisation of compliance

The right mix of people

An multi-disciplinary team comprising:

• Tax technical specialists

• Data management resources

• IT and Excel skillsets

• Accounting knowledge

• Project & Process managers and owners

• 3rd party providers where appropriate

Nationalities Skill sets

The right mix of talents to consolidate and

test data, submit returns, adapt systems

and handle relationships with wider

business and local tax authorities

PeoplePeople

Knowledge is a key to success

Periodical Newsletters

Strong Tax technical knowledgePractical “problem solving”

experience

Innovative EMEA Tax tools

EMEA Tax matrix and overviews

Updated tax Information per country

Expertise

Co

mb

inatio

n o

fS

up

po

rted

by

Perio

dic

al

ou

tpu

t

Continuous professional training

Regular updates of knowledge databases

Knowledge

Knowledge

Reliable processesProcesses

Processes• Important to recognise what

‘compliance’ encompasses

• Preparing the return is a single step in the

cycle

• Centralising compliance will surface pain

points that need to be addressed

• We’re becoming more adept at segmenting

and aligning steps across processes

• Styles of process improvement look different

across businesses but key steps are often

common

Technology trends

• VAT compliance technology market still evolving:

− The number of international solution providers is increasing: with an eye on

making the most of an under exploited market.

− Differing views on how much integration with the source financial systems is

needed

− Still a lot of excel automation being offered in the market

− No solution does it all… yet

• Underpinning technology solutions are supporting more flexible approaches to

delivery. Clients deciding how much Indirect Tax compliance they want to share

with a service provider will replace the ‘binary’ in house vs. outsource decision.

• The systems for managing the tax process, KPI data and document

management are becoming ‘standard’ in many Tax functions, but adoption and

approach vary from group to group.

ProcessesTechnology

© 2014 Deloitte LLP. All rights reserved.

The SMART example

18

© 2015 Deloitte

Why SMART?

Data

Collection

Data

Validation

Data

Processing

Deliverables

Preparation

Review &

Sign off

Submission

& Archiving

Management

ReportingPlanning

Centralized approach to compliance

SMART as an enabler to standardization and centralization of compliance

20030 are large outsourcing accounts

covering Europe and the globe

+

CLIENTS 160+

EMPLOYEES

Including people of16 different

nationalities

43,000+

INDIRECT TAX RETURNS PER YEAR

ISAE 3402certified

(former SAS 70)

Deloitte centralized approach to Pan European compliance…

Limited standardization & automation,

higher risks, and lack of control

Global operating models

Numerous data sources

Data integrity

Variance in data quality

…leading to challenges

Return

generatorManual entry

in e-filing

software

Semi automated tools Semi automated

toolsExcel review

sheets

VAT cube

Manual checks and adjustments

Excel reports

Excel

tracker SMART: automated processing application

© 2015 Deloitte

Reporting requirements

SMART is an application developed by Deloitte that bridges the gap between

companies’ ERP systems and their global indirect tax reporting obligations.

Company data sources

ERP

Legacy Systems

DWH

ITX returns

Listings Reports

End-to-end Indirect Tax Compliance Solution

SMART key features

• Flexible set-up

• Data cleansing and consolidation

• 35+ Quality checks

• Ready-to-file ITX returns

• Full audit trail

• Standard management reporting

Flat files

What is SMART?

© 2014 Deloitte LLP. All rights reserved.21

Executing the strategy

Consider VAT’s position within the wider business

Identify your key stakeholders and determine how to work with them

Take stock of what technology solutions are already available in the GBS and across your tax groups: you may have more to play with than you expect

Focus on complementing and improving current processesrather than disrupting them

Don’t overcomplicate things: it puts adoption of change at risk

Technology is not a ‘silver bullet’. Sustainable improvement takes careand effort

There’s more than one route to ‘best in class’

Executing your strategy

Transform today for

the challenges of

tomorrow

The hidden

challenges of country-

by-country reporting


Lucas Yüksel – Director, Deloitte BelgiumMourad Chatar – Senior Manager, Deloitte Belgium

1

1. Introduction

2. Global tax reset

3. What are the new requirements?

4. How to get prepared ?

5. Conclusion

Contents

3

1. Introduction

1. Introduction

4

Tax & Legal Risk

Management

Volatile economic

environment

Increased complexity of

legislation

More vigilant tax

authorities

Globalized business models

Technology challenges

Customers / Suppliers

Media / NGO’s /

Lobbyists

OECD / BEPS

EU / Anti-abuse

National tax

authorities

Share holders /

Boardroom

CFO / Tax Dir / Staff

New stakeholders in the tax landscape The perception of tax avoidance has

become a reputational risk

5

2. Global tax reset

Feb 2013 July 2013

G20 leaders meet

“Addressing Base

Erosion and Profit

Shifting” published

• Digital economy

• Hybrid mismatches

• Harmful tax practices – phase 1

• Treaty abuse

• Intangibles

• Transfer pricing documentation

• Multilateral instrument – phase 1

• CFC rules

• Permanent establishments

• Interest deductions – phase 1


• Risk and capital, other high-risk

transactions

• Disclosure of aggressive tax planning

• Dispute resolution

• Data collection and analysis measuring

BEPS

• Interest deductions – phase 2


• Multilateral instrument – phase 2

September 2014 September 2015 December 2015

Late 2013Early 2014

Discussion drafts, public

comments, public consultations

on 2014 deliverables

Action Plan delivered to G20 Finance Ministers

November 2012

6

2. Global tax resetBEPS Actions Related to Transfer Pricing

Unilateral measures

7

2. Global tax reset

Example of Unilateral Measures

Anti-hybrid rules introduced and proposals are discussed in the digital area

Announced reform of the corporate tax system to align on international tax law

Legislation on the double Irish Tax structure applicable since 1/1/15 with a 6-

year transitional arrangement.

Law dealing with cross-border transactions incl. advertising industry &

digital economy enacted

Introduction of the tax on diverted profits. Applicable as from 1/4/158

2. Global tax reset


BEFORE AFTER

CbC Reporting

The CbC revolution2. Global tax reset

10

Filing of the 1st

CbC

Action 13: timing 1st CbC reporting

2016 2017 2018

Preparation of

the 1st CbC

Transmission of the 1st CbC

to concerned tax authorities

Next steps

• Adoption of new documentation requirements in domestic legislations;

• Creation of a centralized exchange platform for tax authorities;

• Formal signing ceremony of MCAA (January 2016).

• 2020 ?

2. Global tax reset

Article 6 of the proposed Model Legislation

Country tax administrations should use the report to:

- Assessing high level Transfer Pricing Risks where “effective risk assessment becomes an

essential prerequisite for a focused and resource-efficient tax audit”

- Assess other Base Erosion and Profit Shifting risks in country

Transfer Pricing adjustments imposed by country tax administration shall not be based on CBC

reports: “Country by Country report on its own does not constitute conclusive evidence that

transfer pricings are or are not appropriate”

11

2. Global tax resetAction 13: Country-by-Country reporting implementation package

12

Already implemented /

Implementation in progress

Expected to implement

Hard to predict

Current view on CbC implementation

Further to the release of final report on Action 13, the three-tier documentation package is designed to be implemented via

changes in domestic law by the end of 2016.

2. Global tax reset

13

3. What are the

new requirements?

3. What are the new requirements?BEPS-driven structure of transfer pricing documentation


Implementation framework

Timeline

Threshold

• Country-by-Country reporting to be filed from for fiscal years beginning

on or after 1 January 2016. First report due in 2017.

• Filing no later than 12 months after the last day of the Reporting Fiscal

Year of the MNE Group.

• Country-by-Country reporting would be required for MNEs with

revenues above 750 million Euro.

Filing &

information

exchange

• Jurisdictions should require CbC reporting from ultimate parent entities

of MNE groups resident in their country.

• Automatic information exchange with the relevant qualifying

jurisdictions in which the MNE group operates.

• Emphasis on the need to protect confidentiality of the tax information.15


Notification

obligation

• Any Constituent shall notify the tax authority of its tax residence

country whether it is the Ultimate Parent Entity or Surrogate Parent

Entity who files the CBC Report

• If the Constituent is not the Ultimate Parent or Surrogate UP, it shall

report the identification and address of the UP or SUP.

Reporting

Entity

• Ultimate parent of MNE groups or

• Another Constituent of the MNE when the ultimate parent is located

in a country not having a Qualified Competent Authority Agreement

or is in Systemic Failure

• MNE may chose another Constituent Entity to file the CBC

16

Implementation framework


Content CbC reporting

17

Overview of allocation of income, tax and

business activities by tax jurisdiction

List of constituent legal entities

and business activities by tax

jurisdiction

Additional information to facilitate

understanding (*)

1

2

3

(*) Source of data, FX rates applied,…


1. Overview of allocation of income, tax and business activities by tax jurisdiction

18


2. List of constituent legal entities and business activities by tax jurisdiction

19


Allocation of income, tax & business activities

(*) excludes cash & cash related

Overview of allocation of income,

tax and business activities by tax

jurisdiction

1

Balances

Stated Capital

Cumulated Earnings

Tangible Assets(*)

B/S

P

&

L

Profit/Loss Before Tax

External Revenue

Intercompany Revenue

Current Tax Expense

Item Income Tax Paid#

HR Data

Number of Employees

Transaction

20


21


Different operating possibilities


Insource

• Potential lack of

expert knowledge

• Potentially more

expensive

• Risk of other

priorities

Outsource

• Access to expert

knowledge and

network

• Free up in-house

resources

• Customised

solutions

• Consistent and

proven approach

Co-source

• Access to expert

knowledge and

network

• Integrated approach

4. How to get prepared?

COLLECT FINANCIAL DATA CENTRALLY IN MGMT. GAAP FORMAT

+ less time consuming data collection process

- need to reconcile CbC data with local filings

Data collection strategy: Local Vs. Central

COLLECT FINANCIAL DATA LOCALLY IN LOCAL GAAP FORMAT

+ no need to reconcile CbC reporting with local filings

- time consuming data collection process

23


Identifying & extracting the right financial data source

Which System to use?

Accounting System

(ERP) SAP ECC

Oracle EBS

PeopleSoft

JD Edwards

Other…

Consolidation System

(EPM)

BPC

HFM

Cognos Controller

Other…

DataWarehouse

(BI)

BW

OBIEE

Cognos TM1

..

Number of System Instances

Granularity of Chart of Account

“Legal Entity” Dimension

Point of attentions

24


Leveraging on an end-to-end statutory compliance process

• Calendar of

internal and legal

due dates

• Provide data

• Business information update • Clarify/confirm ad hoc matters• Review and

approve• Submit

Financial

Statements

and CIT return• Review of Financial Statements

and equity

• Review LTP, CITR

• Review and agree

calendar

• Governance and

process

• Upload TB’s

• Update mapping

• Upload integrated PBC data

• Check completion of PBC

• Conduct integrity checks

• Identify, prepare and document

Mgmt to Local GAAP and tax

adjustments

• Preparation of local GAAP TB,

Financial Statements and equity

reconciliation

• Prepare LTP, CITR

• Store on

Deloitte Tax

Insight

• Data analytics

Client

Deloitte

Local

Team

Deloitte

Central

Supporting

Technology

Deloitte Conversion Tool (DCT)

E-filing software

Data Collection Data ValidationData

Processing

Deliverable

Drafting

Review & Sign

off

Submit &

Archive

Mgmt.

Reporting

Process

Planning

CBC reporting Tool

Integrate CBC additional data

points in PBCs:

- Tax Cash

- Income by party

(IC/external)

Review

CBC & TP

ratios

Consolidate

CBC report

26


26

CDX

CDX+

Te

ch

no

log

ical M

atu

rity

Functional Capabilities

Important note regarding attest clients: Neither CbC Digital Exchange (CDX) nor CDX+ (TMC tool) have been

approved for use by Restricted Entity Clients. Consult a QRM before discussing with a Restricted Entity.

Technology : Deloitte CbC reporting solutions

• Multiple ERP or

no ERP

• No dual GAAP

capabilities in

system or not

maintained /

used currently

• No uniform

Statutory

Accounts

Process /

System (Excel

based

adjustments)



Ratio 1 – Accumulated earnings vs Assets

As one can observe, CbC reporting eases the identification of tax / profit

discrepancies among Group (per country) from a high-level perspective.

CbC first experiencesTaxpayer: case 2

28


As one can observe, CbC reporting eases the identification of

substance / profit discrepancies among Group (per country)

from a high-level perspective.

Ratio 1 – Profit before tax vs Employees

CbC first experiencesTaxpayer: case 2

29

29

Technology: Deloitte CDX / CDX+ - Live Demo

CDX: Data Collection - TP Ratios


30

Technology: Deloitte CDX / CDX+ - Live Demo

CDX+: Audit Trail to Financial Systems - IFRS to Stat Rec - TP Ratios


31

5. Conclusion

Key considerations to address in a CBC discussion

Risk Management

What/Where are the Group “material” legal entities?

25

5. Conclusion

Tax Audit Readiness

Can the main statutory differences be explained?

Opportunity

What else can be done with “CbC-like” data?

5. Conclusion

1. Setting of risk objectives

2. A risk mitigation strategy

3. Transformation of processes

4. Implementation of adequate Technology

33

CbC readiness requires

Transform today for the

challenges of tomorrow

Electronic tax audits:

Trends, risks and

approaches

1

Maison de L’automobile

15 December 2015

Rainer Eismayr – Director, Deloitte Germany

Pieter Van Dyck – Manager, Deloitte Belgium

Market trends & SAF-T in general

eAudits across Europe

Our approach & typical challenges

eAudit in Germany: deep dive & case study

eAudit in France: deep dive & case study

eAudit & your organisation

Contents

Market trends &

SAF-T

3

E-Data requirements

Common IT & ERP Landscape

ERP

Apportionment

Manual data

Depreciation

ERP

ERP

L1 L2

Financial systems

Main ERP

Legacy

Other

Extra

ct

Tra

nsfo

rmL

oa

d

Tax data warehouse

Transactions

data store

General ledger

data

Adjustments

data

Results data

Documentation

management

Tax compliance and assurance system

Tax desktop

Tax process management

Tax forms

Provision reports

Ad hoc reports

Reporting

and fillings

Reporting

and fillings

Analysis,

calculation,

adjustments

Income

Tax software

Tax provision

software

Sales/use tax

software

Analysis,

calculation,

adjustments

E-Data requirements

Available Data

TP documentation

Country-by-country

reporting

Electronic data access during

tax audit (comparable to

SAF-T)

Bank dataReporting data

Other data

Tax Authority

Risk Monitoring

and Management

Systems

Tax return data, E-Tax Balance Sheets, XBRL

E-Data requirements - Annual data mining

I. Master Data Tax Code

Accounts

Payable

Accounts

Receivable

Transfer

Pricing

II. Tax

Determination

III. Tax Reporting

Sales and Use Tax

Excise Tax

Customs

IFRS

Cross border reporting

Hidden data Known output

SAF-T

Periodically per legal entity• General ledger

• Accounts payable

• Accounts receivable

• Fixed assets

• Inventory

SAF-T: General

Several audit domains:

• VAT

• CIT

• Transfer pricing

• …

Master data

Trans-action

Balances

eAudit across

Europe

8

9

eAudit across Europe

Priority 1 countries

Portugal

France

Luxembourg

Germany

Hungary (2016)

Poland (mid 2016)

Priority 1


Priority 2 & 3 countries

• Austria

• Belgium

• Finland

• Ireland

• Spain

• UK

• Czech Rep

• Denmark

• Netherlands

• Norway

• Slovenia

• Sweden

• Switzerland

• Bulgaria

• Cyprus

• Greece

• Italy

• Latvia

• Lithuania

• Malta

• Romania

Priority 2

Medium

Priority 3

Low


Different levels of complexity & likelihood

Luxembourg

France Germany

• Any tax audit

• Local GAAP

• Exemptions for FSI

• SAF-T Lite

• At discretion of tax auditor

• All tax relevant data

• Scope of requested data can vary

Lik

elih

oo

d

High

Low

ComplexityLess data More data

Our approach &

typical

challenges

12

Technology Organisatio

n

Step 5

Analyze

> Review

significant

Business

event for the

period

> Review

Accounting

systems

landscape

> Review tax

audit history

Extract

Extract the tax

relevant data

from the ERP

system.

Tax relevant

data depends

on the

jurisdiction

Complement

Add relevant

working

documents:

> GAAP to

Stat

conversion file

> VAT

computation

Reconcile

Reconcile tax

eAudit file

with working

documents

Format

Format Tax

eAudit File

according to

local

requirements

Explain

Prepare

explanatory

notes

regarding the

various data

sets (eAudit

File, working

documents,..)

Archive

Store tax

eAudit Files,

Supporting

Documents &

Explanatory

notes on a

CD/DVD/Hard

drive

Step 6 Step 7Step 4Step 3Step 2Step 1

Our approach

Typical challenges

14

Data Extraction

• Balances & transaction

• Extracted data & local financial statement/CIT return/VAT return

• What about large amount of transactional data?

• …

Data Reconciliation

• Format of the tax eAudit file

• Explanatory notes

• Language difficulties

• …

Data Formatting

• What data?

• How to extract it?

• What about complex IT infrastructure?

• …

eAudit in

Germany

15

eAudit in Germany

Introduction

The rules governing the powers of the tax authorities are set out in detail in the German

Principles of electronic archiving of accounting and tax information, Data Access and the

Auditability of Digital Records (“GoBD”).

These rules define 3 levels of data access

• Direct (Z1)

• Indirect (Z2)

• eAudit file (Z3)

The eAudit file needs to contain all tax relevant data. German tax legislation does not provide

formal specifications regarding form & content of the tax eAudit data file.

Most commonly resquested data

eAudit in Germany

17

Master Data GL Account GL Account Number, GL Account Description and GL account class

Master Data Customer Master Customer ID, Customer Name, Customer Country and Customer VAT Number

Master Data Vendor Master Vendor ID, Vendor Name, Vendor Country and Vendor VAT number

Master Data Tax Code Tax Code ID and Tax Code description

Master Data Journal Category Journal Code, Journal Label (Invoice, Payment, FA, Manual)

Balances GL Account Balance Fiscal Year, GL Account Number, Opening balance, Total Debit, Total Credit, Ending Balance,..

Balances Customer Balance Fiscal Year, Customer ID, Customer Opening Balance, Customer Ending Balance

Balances Vendor Balance Fiscal Year, Vendor ID, Vendor Opening Balance, Vendor Ending Balance

Transactions GL JournalsFiscal Year, Fiscal Period, Journal Code, Journal Name, Journal Date, GL account Number,

Journal Description

Transactions Invoices/Credit NotesFiscal Year, Invoice Number, Invoice Date, Invoice Gross amount, Invoice Tax, Amount,

Vendor/Customer ID, Tax Code

Transactions Payments Fiscal Year, Payment Number, Payment Date, Payment Amount, Vendor/Customer ID

DATA TYPE DATA DEFINITION EXAMPLES OF DATA FIELDS

Risks & Penalties for non complianceeAudit in Germany

Penalties up to 250.000 EUR in case:

• Electronic bookkeeping maintained abroad without prior authorization

• Data access not provided to tax auditor within a reasonable timeframe

Bookkeeping not kept in accordance with German tax Law can lead to:

• Ex-officio assessment (Estimation of German tax base)

• Electronic bookkeeping (Server) to be relocated (back) to Germany

• GL bookkeeping process of German Tax Payer to be relocated (back) to Germany

18

Tools & Auditing method used by tax authorities eAudit in Germany – Periodic data mining

• Electronic tax data testing

• Software publicly available for sale

19

AIS Tax Audit and

IDEA

Macros

• Set of different macros at disposal

• Reproduce typical tax audits tests for income, wage and

value added tax

eAudit in Germany – Periodic data mining

Tools used by the German tax authorities

Example: Tax officer looking for non-deductible expenses for tax purposes

• AIS Tax Audit: query to detect non-deductible expenses like donations, penalties or

presents which are not accounted correctly

• Following steps are carried out by the tax officer:

1. Mapping of the relevant fields

2. Determination of filters (e.g.: GL accounts, keywords)

3. Preparation of a file including the relevant accounting lines

4. Preparation of a documentation regarding the findings


Example / best practicesA. Mapping of the relevant fields Mapping

ERP

tables as

uploaded

into the

software

by the tax

auditor

Required

data fields

to

perform

the test

macro


Example / best practices

B. Determination of filters (eg GL accounts, keywords)

• Limitation of GL accounts to be scanned

• Determination of keywords included in the posting text eg “Hotel”, “Gift”

Input range

of accounts

to perform

the test on

Enter search

terms



C&D. Non- deductible expenses – result & documentation

Test-macro result

Print report



C&D. Non- deductible expenses –

result & documentation

• Direct display findings with regard to

the non-deductible expenses

> all expenses are booked correctly /

incorrectly

• Tax auditor can prepare a

documentation regarding

his / her findings during the audit

• All validation routines in the software

can be performed

by the tax auditor in one batch, i.e.

very low effort with a

high statistical likelihood to find errors

leading to additional

tax assessments at the end of the tax

audit

eAudit in Germany

Case study

Situation:

• Multinational US headquartered

group in the biopharmaceutical

industry had a tax audit ongoing

(income tax and VAT) for the years

2008 – 2011

• The accounting was done in a

Shared Service center in Poland but

the German tax authorities were not

informed prior to relocating the

accounting to Poland

• 2013: the former ERP system was

changed to SAP ERP 6.0. The data

has been archived electronically by

the IT department without consulting

the tax / accounting department

• The tax auditor request:

• a direct access to the ERP system

of the German subsidiaries for the

years under audit (Z1 access)

• alternatively an electronic audit file

for tax for each entity and year

eAudit in Germany

Case study

Issue:

An analysis revealed that the former system could not be restored. A review of the

electronic data files showed that the data was not in line with the German financial

statements as the US-GAAP to German GAAP bridge was missing in the data

files.

Tax auditor threatened to estimate the taxable profits which would have led to

additional income taxes of approx. € 5mio.

eAudit in Germany

Case study

Outcome:

Client had to

• Go through a full restructuring exercise of the electronic raw data to prepare the

data in accordance with the financial statements in order to avoid an estimation

of the tax base and a relocation of the accounting back to Germany

• Draft new eAudit files for all years under audit

Recommendation:

Prepare the electronic audit files each year together with the filing of the tax return

in order to avoid issues with the tax authorities in a later tax audit.


eAudit in France

28

eAudit in France

Introduction

eAudit Legislation into force since

01/01/2014 for all years open for audit

The eAudit legislation is applicable on:

• Legal entities

• Branches

• Non established VAT registered

entities

A transactional French GAAP tax eAudit

file (FEC - Fichier d’Ecritures

Comptables) must be submitted to the

French tax administration (FTA) at the

beginning of the tax audit.

The eAudit file has a fix format and

contains 18 mandatory fields

eAudit in France18 mandatory fields

Field name Information

1. JournalCode The journal entry code

2. JournalLib The journal entry label

3. EcritureNum The accounting entry number

4. EcritureDate The accounting date

5. CompteNum The account number

6. CompteLib The account label, under the French Accounting Plan

7. CompAuxNum The sub-ledger account number

8. CompAuxLib The sub-ledger account label

9. PieceRef Supporting document reference

10. PieceDate Supporting document date

11. EcritureLib Accounting entry label

12. Debit Debit amount

13. Credit Credit amount

14. EcritureLet “Apply-to/clearing” entry

15. DateLet Clearing date

16. ValidDate Posting date

17. Montantdevise Currency amount

18. Idevise Transaction currency name

eAudit in France

Risks & penalties for non-compliance

Limited administrative penalty, eAudit file remains due

Application of the ‘ex officio’ procedure

• Reversal of the burden of the proof from the start of the audit

• Additional 100% penalty computed on additional amounts of taxes to be paid at

the end of the audit.

eAudit in France

Case study

Situation:

A multinational operating in the IT

industry has an tax audit ongoing (VAT

& CIT) and generates the eAudit file for

3 years.

The client engages Deloitte for a

technical validation of the file.

After testing the file is provided to the

auditor.

The auditor challenges several entries

as it seems that eg some sales invoices

are booked as cost minus instead of

revenue.

eAudit in France

Case study

Issue:

Analyses disclose that the mapping

done between management GAAP and

French GAAP is incorrect. Several

turnover accounts in management

GAAP are mapped to French costs

accounts etc

Outcome:

Client had to

• Revise mapping & update their ERP

system

• Draft 3 new eAudit files

• Draft 3 corrected financial statements

Additional, the processes were heavily

challenged and an additional IT audit

was launched.


eAudit & your

organisation

34

eAudit & your organisation

Conclusion

• Large volumes

• Extraction programs

• Assembly & storage

• ERP localizations

• Local adjustments

• Reconciliations

• Extraction – storage

• Data sources

• Data collection

• Data limitations

• Audit trail

• Legacy systems

• Policy review

• Process manuals

• Training

• Roles and

responsibilities

Transform today

for the challenges

of tomorrow

Invoice

Management

1


Hilde Vandeperre – Director, Deloitte BelgiumSara Claeys – Manager, Deloitte Belgium

1. Introduction

2. Sales invoices

3. Purchase invoices

4. Other relevant documents

5. Conclusions

Contents


Introduction


Although largely

harmonized, we need to

check which Member

State’s rules apply.

LEGISLATION

AUTOMATION

Automate as much as you

can but in a smart way.

HIGH VOLUMES

How to deal with high volumes

of invoices in an efficient but

VAT compliant way?

ANALYTICS

Set up in such way that invoices

can be easily checked in an

automated way

REPORTING

VAT reporting should be

possible in an easy manner,

avoiding human intervention.

CHANGE MANAGEMENT

Make a proper case study and

make sure everybody is on

board when automating.

Sales invoices

4© 2015 Deloitte Belgium²

Sales invoices

How to deal with sales invoices in an

efficient and VAT compliant way?

Things to consider:

• Invoice lay out

• Tax code determination

• Exchange of invoices to customers

• E-invoicing

• E-mail with PDF

• Point to point communication

• Use of a portal

• Use of a platform

• Some numbers

• Paper

• Storage of your sales invoices


Sales invoices – lay out of your invoices

The importance of the lay out of your

invoices is often underestimated.

An invoice needs to be

• Clear at first glance

• Interpretation is per se not OK

• VAT compliant at minimum

• Extra fields like a ship from are very

useful

• Internally

• And for the customer

• Ideally contain intrastat info – if needed

• Is customer using OCR?

• You may not know but a lot of

companies do nowadays

• Then your invoice lay out matters

(e.g. templates, standard ERP lay

outs)

• Is a document that your customer

receives and needs to work with.


Sales invoices – tax code determination

Typically all parameters are known to have a tax code determined automatically by the

system.

A typical SAP example:

CoD CoA MTC CTC + Tax code

E.g. BE BE 1 1 A1

E.g. BE BE 2 1 A0

E.g. BE AT 1 1 A2



Standard tax code determination is made more and more intelligent through

• Extra parameters

• Use of specific tax code determination software such as bolt ons, also for EU.

A typical SAP example:

CoD CoA MTC CTC + e.g. INCO Term Tax code

E.g. BE BE 1 1 EXW A1

E.g. BE BE 1 1 FCA A0

E.g. BE AT 1 1 DAP A2



Typical pitfalls

• Limited determination

• Only core business manual invoicing goes wrong

• Transport conditions are not taken into account

• Specifics are set up but the users are not aware of it, do not understand what has been

set up

• Lack of documentation

• Lack of training

• Users are not sufficiently informed about the possibilities

• Knowing what the system does or does not do, can prevent issues.


Sales invoices – electronic invoicing

• The use of an electronic signature shall be

subject to the acceptance of the recipient

‒ Consent is still required.

• To avoid that people receive electronic

invoices which they are not able to

treat due to IT technical restrictions

• The need to guarantee authenticity of

the origin and integrity of the contents

remains mandatory

‒ Now applies to both paper and

electronic invoices

‒ Legibility of the invoice has been added

‒ From issue until the end of storage

period

• Definitions

‒ Authenticity of origin = Assurance of the

identity of the supplier or issuer

of the invoice

‒ Integrity of contents = Contents has not

been altered


Sales invoices – electronic invoicing

Each taxable person shall determine the way to ensure the authenticity

and integrity

• By business controls

• Which create a reliable audit trail between an invoice and a supply of goods and services

− Supply chain documents such as PO, delivery notes, payment

− Three-way matching principle

• Technological means can still be used.

• EDI

• Qualified electronic signature created by means of a SSCD

• By 31 December 2016 an assessment report will be made.


Sales invoices – storage

Invoices need to be stored for a legal

period – depends on the EU Member State

VAT legislation requires that

• Authenticity and integrity can be

guaranteed during the entire storage

period

• Electronic invoices can be stored within

EU (online access required). Paper often

needs to be kept locally.

• In principle to be archived in format as

issued

• Practicalities

• Do we have to print copies of

invoices issued?

• In principle yes, but quite a lot of

Member States allow that copies are

archived electronically

• Check specific rules

• Watch out with master data

changes

• Technical limitations


Purchase

invoices

13

Purchase invoices

Technology Organisation

How to deal with purchase invoices in an efficient and VAT compliant manner?

Things to consider:

• Each invoice you receive needs to get posted and a tax code needs to be assigned

tax code determination

• Each invoice you receive needs to be entered in your accounting

ideally in an automated way. E.g. via e-invoicing

But also have a solution in place to deal with paper invoices efficiently.

• Self-billing avoids that you have to enter the invoice in your accounting

can be done in an automated way.


Purchase invoices - tax code determination

An example:

OCR ERP ERP FI

Tax Function

Module

Scanned

Invoice

Invoice

Structured

Data

Invoice

Postings

Auto-Tax

Assign tax

codes

Calculate

tax

amount

Determination

tables

ERP Tax

Codes Profiles

With OCR – Optical Character

Recognition – key tax information

will be determined on the invoice

(e.g. Vendor VAT ID)

Re-trigger

the tax

function

module

Other e-

invoice


Purchase invoices - tax code determination

Acquire

Input Data

1. PO data(e.g. Ship To

Country)

2. Master data (e.g. Material Tax

Indicator)

3. Invoice

Data (e.g. Vendor VAT

number)

Apply

Business

Rules

Look-up Tax

Codes

Assign Tax

Codes

Tax Function module

Data elements

required for tax

determination

(i.e. input

parameters of

ERP condition

table)

Interpreting

data (e.g. how

to handle

exceptions,

missing

data,…)

Look-up tax

codes from

ERP condition

tables

Tax code

assigned to

each item line

of PO and non-

PO related

invoices

Invoice

Items with

Tax Code


Purchase invoices – e-invoicing

The VAT rules that apply to e-invoices for Purchase invoices are

the same as for Sales invoices (see above).

Some key considerations:

• PDF invoices received via e-mail can be opened in an automated

way (e.g. e-mail connector) and processed by means of OCR.

• A portal (PO flip over) makes invoices easier to post/process in your

ERP system.


Purchase invoices – storage

• In order to keep only the scanned images, specific requirements need to be met, which

are country dependent.

‒ E.g. France does not allow digital archiving of paper invoices received

‒ E.g. Belgium allows scanning under specific requirements

• A new circular letter is to be expected for Belgium

• Attention for 8th Directive refund claims or expense invoices

• Place where invoices are sent to for processing. Is it allowed to send invoices abroad?


Purchase invoices – self-billing

Invoices may be drawn up by the customer, where there is

• A prior agreement between the two parties AND

• Prior means before first self bill is issued

• provided that a procedure exists for the acceptance of each invoice by the supplier.

• Both parties must be able to demonstrate the existence of the agreement separately

to the tax authorities

• Acceptance can be done implicit or explicit:

• E.g. by paying

Year end discounts – Belgian specifics that customer can raise a self-bill


Other relevant

documents

20

Other relevant documents

Your company will receive other documents than invoices which will have a VAT

impact:

• Expense note

• Digital expense notes

• VAT refund claims

• Customs documents

• Import & Export declarations


Summary

Legislation is slowly

catching up with

innovation.

Should your company

wait to automate

invoice processes to

get e.g. more legal

certainty?

1No, surely not.

A lot can be done

already in a VAT

compliant way.

Reflection and

documentation is

key.2

Also

inspections will

be done in a

different way.

Be prepared

for it.3

A well

managed

invoice

process

will

prevent

errors/risk

4


Questions

Questions

We are happy to

answer any question

you might have.

Tank you for

attending our break

out session.


Tax Technology

Architecture

The need for a

roadmap

Maison de L’automobile

15 December 20151

Tax Technology - Main challenges

Tax Transformation - Getting in control of your destiny

How to deal with the tax transformation - Need for a structured approach

Guiding principles for building a roadmap

Conclusion - Tax transformation journey

Contents

3

Tax Technology

Main challenges

Tax Department is a large consumer of data

Several types of tax relevant data


Unstructured Structured

Financial

• Trial balances

• VAT ledger

• Expense reports

• Forecasts

• Tax payments

• GAAP adjustments

• e-Tax returns &

e-Audit

• Share options

• Tax adjustments

• Employee numbers

and locations

• Tax registrations

• R&D timesheets

• Business activities

• Due dates

• Work allocations

• Most statutory

accounts

• Paper tax returns

• Tax calculations

• Master file / Local file

Non-Financial

• Valuation reports

• DTA* recognition

• Tax advice

• APAs*

• Master file / Local file

• UTPs*

*DTA – Deferred tax asset

*APA – Advance pricing agreement

*UTP – Uncertain tax position

Complexity of Tax Technology Landscape

Fragmented origination & processing of tax

relevant data


Key tax trends will further increase technology

challenges in the tax function

7

Driver General trend Tax impact

Cost reduction • Economic changes

created need for

cost reduction

• Standardisation

• Outsourcing partners

• Automation of processes

Technology • (Tax related)

processes are

automated

• Combination of IT and tax expertise

• Changing workforce skills

Regulatory and

social change

• Changing

regulations,

specifically in EU

• Ethics and accountability issues

• Tax administration relationships

• Stakeholder focus

Transparency

and risk

management

• Increased scrutiny of

fiscal behaviour

• Rules about tax

processes

• Transparency about operational targets and

degree of control

• Defined responsibilities and upheld through

supervision

• Tax risks in business’ internal processes

• New legislation (national and international)

for management, supervisors and financial

authorities (e.g., the AFM, the Netherlands

Authority for the Financial Markets)

• U.S. requires stricter tax

processes.

• Korea requires disclosure of

Tax Control Framework.

• China requires access to

internal tax risk control

systems.

• Australia assigned risk ratings

to large enterprises.

• India is having more audit-

based controls.

• UK requires a Senior

Accounting Officer.

• The Netherlands implemented

Horizontal Monitoring.

• Germany requires standard

audit file for tax e-audit.

© 2015 For information, contact Deloitte Touche Tohmatsu Limited

8

Tax Transformation

Getting in control of

your destiny

Tax department objective

Transform to become more efficient in Operator

role and enable Strategist and Ambassador role


Current state Target future state

10

How to deal with the

tax transformation?

Need for a

structured approach

Structured approach needed

Framework: Key components of tax

transformation


Str

ate

gy a

nd

ex

ec

uti

on

Reg

ula

tory

co

mp

lia

nc

e

Cas

h t

ax

an

d p

aym

en

t m

an

ag

em

en

t

Clo

se

, p

rovis

ion

, a

nd

pro

ce

ss

Ta

x b

us

ine

ss

pla

nn

ing

Ris

k a

nd

ta

x c

on

tro

ve

rsy

Global direct tax

Global indirect tax


organization

Technologyand systems

Processand policy


Enablers

Value drivers

Technology and data

Financial systems not tax sensitized


Financial systems (ERP, EPM, …)

often not tax sensitized

2 options

Option 1: Tax-enabled financial systems

• Long term

• Significant investment

• Outside of span of control of Tax

• Up to a point

Option 2: Remediation in Excel

• Short term

• Can be done with own resources

• Under control of Tax

• Flexibility

Most common approach, but…

Role of Excel Today

Making the headline


• 90% spreadsheets contain errors

• Spreadsheets used in business decisions can be costly

• One error can destroy reputation

Common Tax/Finance issue

End User Computing Application (EUCA)


• Excel workbooks are complex and manually intensive to create,

maintain, use, and are highly prone to internal design errors that may

result in flawed data

• Multiple versions of Excel documents impact decision making

• Unautorised access to Spreadsheet can be altered

• Input errors: Inaccurate cut-paste, inadvertent changes in cells,

incorrect links, import of incorrect data or import with wrong

parameters

• Logic errors: Due to incorrect formulas, and incorrect input data

• Usage error: Incorrect use of functions, ranges and references

• Inconsistent processes across tax departments/locations result in data

integrity issues

• Focus more on EUCAs by internal and external auditors

• Accurate of data can be compromised in Excel due to formula errors,

manually entered data and version control issues

Fixing Excel Spreadsheet for Tax

Improve, integrate, manage


1

2

3

Improving individual spreadsheets

The highest risk spreadsheets could be improved. This might

include making them simpler to operate, making the formulae

and flow of information more transparent to the reviewer, and

enhancing the controls present in them. Training would also

ensure best practice designs are used in the future

Integration within wider process

Improving how the spreadsheet interacts with other processes

helps validate its role, and gives greater confidence on the

robustness of the wider process. For example: automating what

information should and can come in; designing and automating

key reports

Managing large numbers of spreadsheets

Large numbers of spreadsheets leads to requirements such as

version control, knowing when and what changes are made

and a need to identify and visualise links between workbooks.

Off-the-shelf or bespoke control environments help manage this

Structuring the Data Flow

Tax Management and Tax Process Systems


Outsource provider

teams

• Local offices

• Compliance centres

• Centres of excellence

• Service centres

• A mix of resources

• Onshore

• Nearshore

• Farshore

Outsource provider

teams

• Local offices

• Compliance centres

• Centres of excellence

• Service centres

• A mix of resources

• Onshore

• Nearshore

• Farshore

Tax Management System

Example of Tax Workflow Tool - OWM


Calendar

•Manage Tax

Deadlines

•Publish and track

external and

internal due dates

•Available “Out-of

–the-box” global

content

•Tax portal or

desktop, including

visibility into KPI’s

•Proactively

monitor status of

workflow,

calendar, and data

collection

activities

FileRoom

•Web-based document

management &

storage

•Document indexing

for quick search

•Control access to

documents and

manage versions

•Task and due

date management

•Auto notifications

to Tax Dept

members of

assigned tasks

• Integrate process

control steps and

sign-offs

WorkFlowDataFlow /

Data Management

•Standardize

collection of

supplemental tax

data

•Consolidate data

from data collects

and integrate with

tax workpapers or

tax systems

Dashboard Reporting

Tax Process System

Example VAT compliance tool - SMART

18

Data

Collection

Data

Validation

Data

Processing

Deliverables

Preparation

Review &

Sign off

Submission

& Archiving

Management

ReportingPlanning

SMART: automated processing application

People and Organisation

Transformation impacts Tax Practitioners

19

Talent diversification in Tax

• Strong tax technical expertise and F.A.T. (Finance, Accounting and Tax) backgrounds

remain important, but more STEM (Science, Technology, Engineering & Math)

related skills will be required

• Drives change in how to attract, recruit, retain & grow people

• Impacts professional service providers and other sourcing channels

20

Tax transformation

Guiding principles

for building a

roadmap

Tax Transformation Roadmap

Guiding principles for step by step approach


• Fully engage in the tax

transformation journey

• Put in place governance and run the

tax transformation as a program with

intermediary milestones, various

workstreams, interdependencies,

stakeholder and people

management, …

• Define your tax processes

• Identify risks & opportunities to

improve (input to business case

for transformation)

• Define priorities

• Elaborate vision and roadmap

• Fix the basics and implement quick wins

• Get in control of Excel remediation

• Automate the provision process

• Bring return preparation in-house

• Fully leverage and integrate the licensed ONESOURCE products

Case study – Sample Roadmap

Client’s objectives

Opportunity Workstream Impact Priority

Source data Phase I: Expand blueprinting and define

requirements for automation, data collection, and

accounting/finance

High

Phase II: Build, Test, and Deliver based on

Phase IMedium

Automation

Phase I: Design Automation Solutions leveraging

“Source Data” workstream Phase IHigh

Phase II: Build, Test, Deliver based on Phase I Medium

Tax

ProvisionPhase I: ONESOURCE Tax Provision Upgrade Medium

Return to

Provision

Phase I: Return to Provision Design, Build, and

TestMedium

Work Flow

Manager

Phase I: Design Requirements for selected

softwareMedium

Phase II: Build and Test based on design in

Phase ILow


Opportunities overview

Workstream May

2015

Jun

2015

Jul

2015

Oct

2015

Jan

2016

Apr

2016

Jul

2016

Oct

2016

Jan

2017

Source data

Automation

ONESOURCE

Tax Provision

ONESOURCE

Return to

Provision

ONESOURCE

Workflow

Manager


Draft timeline

• Tier legal entities based on materiality to ensure that Client is focusing

time on the units that make up a pre-defined % of pre-tax book income

• Eliminate duplication of effort

• Client performs tasks twice, once in Microsoft Excel and once in the

software to validate ONESOURCE calculations

• Review data sources for each phase of the tax life cycle and document

the data providers and requests within a workflow tool

• Build standardized packages that are connected to ONESOURCE

products


Strategic observations

26

Conclusion

Tax transformation

journey

Tax Transformation journey

Wrap-up


- Data and Technology cause challenges for Tax

departments: landscape is complex and

- Significant focus on operational matters

- External trends further accentuate those

challenges

- Technology enabled Tax Transformation is

required to address those challenges

- A long term vision and structured approach is

needed given there are many areas to

address: data, different tax processes,

technology & systems, people & organization

1

2

Str

ate

gy a

nd

ex

ec

uti

on

Reg

ula

tory

co

mp

lia

nc

e

Cas

h t

ax

an

d p

aym

en

t m

an

ag

em

en

t

Clo

se

, p

rovis

ion

, a

nd

pro

ce

ss

Ta

x b

us

ine

ss

pla

nn

ing

Ris

k a

nd

ta

x c

on

tro

ve

rsy

Global direct tax

Global indirect tax


organization

Process and policy

Technology and systems


Enablers

Value drivers

Tax Transformation journey

A roadmap to enable the shift in focus from

Operator/Steward to Strategist/Ambassador


Current state Target future state

- Approach and vision need to translate into a transformation roadmap

- Transformation should be run as a program3

29 Copyright © 2015 Deloitte Development LLC. All rights reserved.

About Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of

which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche

Tohmatsu Limited and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its

subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively,

the “Deloitte Network”) is, by means of this communication, rendering professional advice or services. No entity in the Deloitte network shall be responsible for

any loss whatsoever sustained by any person who relies on this communication.

Copyright © 2015 Deloitte Development LLC. All rights reserved.

Member of Deloitte Touche Tohmatsu Limited

Transform today

for the challenges

of tomorrow

Indirect Tax

Analytics:

Intelligent data

1

Maison de L’automobile24 November 2015

Hilde Vandeperre– Director, Deloitte BelgiumMo Giovanni Gijsels – Senior Manager, Deloitte Belgium

Customs &

Global Trade

Analytics

2

Setting the scene

• Is your company involved in import or export activities?

• Do you know the duty burden of your company?

• Do you know departure and destination countries?

• Do you know if preferential duty rates are applied?

• Do you know your brokers?

Setting the scene

ERP environment only covers basic functionalities

The end result is often not coming back

3rd Parties are doing the actual filing

What

companies

think they are

doing, is quite

often different

from what they

are “doing”

Specific flows require a specific treatment

Setting the scene

How many

brokers do

we have?

EXW or DDP?Proof of

export?

What is the UCC

impact?

New CN

codes

Do we use preference?

Are we over-

or under-

reporting

duties?

Are we impacted

by export

controls? …

VAT

deferral?

CGT Analytics: tools and sources

Own ERP Data

Declaration data

GTM Dashboard

Other tools and support

12

34

Working with ERP data

• Always available

• Rather easy to obtain

• Good starting point:

• Important trade

lanes

• Important materials

• Master data quality

• …

• Trends & Indications

• Client specific

• Complex for cross

system comparison

• Does not say anything

about the actual data

Working with declaration data

• Actual declared data

• Provided by

authorities or brokers

• All customs elements

• Cross checks with

VAT

• Full overview

• Standard

• Not possible in all

countries

• Broker data: did we

cover them all?

• Differences in format

remain

Working with own GTM data

• Actual declared data

• Own data

• Possible for multiple

countries

• Full overview:

• Reporting

• Analyzing

• Trends

• Client specific

• Link with logistic

systems

• Not always possible for

all processes &

countries

• Data infrastructure

requirements

Supporting tools

• Address specific need

• Landed cost tool

• Classification tool

• FTA

• Low cost of

implementation

• Ease of use

• Multiple users (e.g.

intranet)

• Should be a second

step, not a starting

point

• No full integration with

company systems

• Patchwork of solutions

• Limitations

VAT Analytics

11

Setting the scene

• Are your ‘VAT’ and ‘intrastat’ master data under control?

• Is the VAT treatment of an invoice following the actual flow of goods?

• Do you know who processes AP invoices the most correctly?

• Do you know whether AP invoices are processed timely?

• Do you know which invoices are the most important ones to check in terms of

amounts?

Setting the scene

Impact of

Incoterms? Services for

invoices issued

to established

entities?

Actual flows

How many ERP

systems do you

have

Missing CN

codes

How many different VAT numbers?

Consistent

VAT

treatments

applied?

Correct use of

VAT numbers? …

VAT input

deduction

VAT Analytics: tools and sources

Own ERP Data: logistical data

Own ERP Data: master data

Own ERP Data: financial data

Other tools and support

(e.g. VAT rate tables)

12

34

Working with logistical ERP data




• PO and SO

• Delivery information

• …

• Challenges:

• Link to financial

data (e.g. various

materials, only 1

tax code)

• Possible interface if

logistical & financial

data are in different

ERP systems

Working with ERP master data

• Check on availability



• Customer data

• Supplier data

• Material master

data

• …

• Check between

transactional master

data used and static

master data (e.g. VAT

number)

• Possibility to look at

missing master data

for relevant

transactions only.

• Get insights in

amounts.

Working with ERP financial data




• Ledgers

• Accounting

• Tax codes

• …

• Line level detail

comparisons

• Comparisons:

• Per entity

• Per country

• …

• High volume of dataµ

• Gain new insights

Supporting tools

• Updated VAT rate

tables

• Updated list of

commodity codes

• List of commodity

codes with specific

VAT treatments

• Import/Export data

• Local reverse charge

rules

• VAT compliance

related information

• Importance of working

with updated

information

Questions

Questions

We are happy to

answer any question

you might have.

Thank you for

attending our break

out session.


Transform today for

the challenges of

tomorrow

Corporate taxes and

statutory accounts:

A single challenge

1


Gino Van Hoornyck - Deloitte BelgiumChris Kinders – Deloitte Netherlands

• Tax compliance delivery models

• Integrating statutory accounting and corporate tax reporting

• Technology

• How to get started

Contents

Tax compliance delivery modelsOur global operating model is used to deliver services via three overall methods that recognize the degree of clients’ desired

centralization. We are seeing a shift in the marketplace toward coordinated and centralized delivery, which provides increased

visibility, process efficiencies, and risk mitigation.

• Full visibility

• Mitigated risk

• Improved standardization and

process efficiencies

• Limited visibility

• Lacks consistency and efficiency

• Full visibility

• Further process efficiencies, data

quality and risk mitigation

• Data analytics, tax modeling, etc.

local-to-local delivery central-to-central delivery

01/ 03/Delivered and

managed locally

Delivered and

managed centrally,

supported locally 02/ Delivered locally,

managed centrally

CoordinatedDecentralized Centralized

Tax compliance delivery models

Key decision drivers

OrganisationSSC strategy

Role of retained finance

Tax and local GAAP knowledge at SSC

Process

/ Data

Structured vs unstructured process

Granularity of data and tax sensitization

Quality and location/ownership

TechnologyNumber of ERP / legacy system(s)

Harmonization of ERP systems

Consolidation, integration and level of localisation

Business Fully fletched vs stripped

Stability of the business model

Local

requirements

Complexity of local requirements / regulation

Language requirements

Centralised Decentralised

Integrating statutory

accounting and

corporate tax reporting

5

Statutory accounting and corporate tax reporting

Why integrate these processes?

6

• Harmonized E2E compliance process

• Integrated workflow management

• Simplify data management

• Reduce lead-time & efforts

Process Efficiency

• Greater visibility of filing status

• Transparency of filings through GAAP to tax rec’s

• Increased data consistency

• Increased quality of filings

Risk Management

Components of a standard E2E compliance process

• Definition of a standard 8-Steps global process for the management of

compliance

• Review of key milestones to identify process owners: integration into a

responsibility matrix


Data Collection Data ValidationData

Processing

Deliverable

Drafting

Review & Sign

off

Submit &

Archive

Mgmt.

Reporting

Process

Planning

Tax compliance delivery models

Defining the components of the tax function


Key actors to consider

SSCs

CoE

(Hubs)

Global

Tax

RFO

Consulted

Informed

Accountable

Consulted

Informed

Responsible

Informed

Responsible

Consulted

Informed

Defining main activities


Deloitte Tax Insight

Data

Collection

Data

Validation

Data

Processing

Deliverable

Drafting

Review &

Sign off

Submit &

Archive

Management

Reporting

Process

Planning

• Confirm availabilities

• Calendar of internal due

dates

• Share business info

update

• Provide source data

• Prior year package

• Provide additional data

• Business information

update

• Clarify/confirm ad hoc

matters

• Review and approve • Submit CIT return and

statutory financial

statements (where

client is required to do

so)

• Assess impact of non-

routine business events

on stat & tax

compliance reporting

• Discuss impact of non-


on tax compliance

reporting

• Prepare draft CIT

returns

• Review book-to-tax

reconciliations (RTA)

• Finalize CIT return

• Prepare Deloitte

standard Tax Reporting

Memo

• Review and discuss

client comments

• Submit CIT return and

statutory financial

statements (where

Deloitte is able to do

so)

• Assess impact of non-


on stat & tax

compliance reporting

• Review due dates and

agree calendar

• Governance and

process

• Perform data validation

• Monitor data gathering

process

• Inform client of

additional information

needs

• Discuss impact of non-


on tax compliance

reporting

• Monitor timely requests

and receipt of data from

the regional vantage

point

• Prepare local GAAP TB

(GAAP conversion)

• Prep book-to-tax

reconciliations (RTA)

• Prepare statutory

financial statements

• Finalize statutory

financial statements

• Review Tax Reporting

Memo for consistency

checks

• Review and discuss

client comments

• Post return and

deliverables to DTi

• Data analytics

• Regional / global

reporting on tax issues

Company

Deloitte

Local

Global Tax

Center

Supporting

Technology

DCT – Local CIT tools E-filing software

Mapping Roles and Responsibilities



A new resourcing model

Historic resourcing

model

Future resourcing

model

New skillset:

• Accounting and Finance

• Tax technical

• Business

• Technology

• Communication

• Mobility

People are knowledge workers

Technology Knowledge

Process

Technology

13

Technology - Deloitte Tax Insight

DTi, our web-based collaboration solution that supports efficiency, transparency and

enhanced performance. This secure web-based “digital dashboard” provides access to our

collaboration space, allowing us to share information with our clients 24 hours a day.

Key Benefits

• Achieve greater visibility

• One source of truth

• Improved control

Technology - Deloitte Conversion Tool (DCT)

Replacing previous Excel based Conversion files, The Deloitte Conversion Tool (DCT) is an

application developed by Deloitte to support GAAP to GAAP reconciliation and provide

companies with multiple reporting functionalities.

Key Benefits

• Reduce risk

• Achieve greater visibility

• Save time

• Ensure standardization

• Improve consistency

• Minimizes on going

report maintenance

How to get started – Q&A

?

Transform today for

the challenges of

tomorrow

Closing


Andre Claes – Partner, Deloitte BelgiumMark Kennedy – Partner, Deloitte UKPatrick Joucken – Partner, Deloitte Belgium

1

The environment Management of tax

3

The business responseManagement of tax

Tax

Governance

and Risk

Management

ResourcingTax Operating

Models

Tax Data

and

Systems

4

Components/building blocks of the tax functionTax Resourcing Models

• Tax objectives

• Tax strategy

• Technology strategy

• Tax risk framework

• Process

determination

• Controls operation

and internal audit

• Technology tools

• Compliance manual

• Tax risk register

• Tax audit support

• Tax litigation

• Master Data

Management

• Tax return data

• Local Stat Accounts

• Return preparations

• Compliance

Outsourcing

• TP documentation

preparation

• Financial close for

Tax

• Reconciliations

• Indirect Tax

• Accounting analyses

for Tax

• Management

reporting on Tax

ComplianceAccounting and

reportingTax strategy

Operational risk

management

Organisation and resources

Automation and technology integration

Operational Strategic

More likely in SSC More likely in Tax

5

Facing big questions from stakeholders

6

“What would a

5bp increase in

our ETR mean

for us?”

“How do we

know if are

compliant across

all our taxes,

everywhere?”

“What and

where are our

biggest tax

risks?”

“What is the

total cost of my

tax function?”

The Four Faces of the Tax Director

7

Tax Manager ObjectivesMoving from Operator to Strategist – Current state

9%

Reporting

10%

Review

15%

Rework

22%

Tax

Adjustments

40%

Information

Gathering

StrategistAmbassador

3% Stakeholder management 1% Planning

8

Where do you stand?Questions

1. Do you have a tax technology roadmap?

9

Rating scale:

1 – I have not started yet

5 – We are ready!


2. Are all tax processes properly documented for all countries?

10

Rating scale:


5 – We are ready!


3. Are tax roles and responsibilities well defined between finance and the tax

department?

11

Rating scale:


5 – We are ready!


4. Do you use SSC for producing tax compliance data?

12

Rating scale:


5 – We are ready!


5. Are the VAT ledgers produced by a system and require little or no adjustments?

13

Rating scale:


5 – We are ready!


6. Are statutory accounts produced decentrally and reviewed centrally by tax?

14

Rating scale:


5 – We are ready!


7. Have you started preparing for CbC reporting obligations?

15

Rating scale:


5 – We are ready!


8. Are you prepared for tax eAudits in Europe?

16

Rating scale:


5 – We are ready!

Tax Manager ObjectivesMoving from Operator to Strategist – Future state

10%

Reporting

10%

Review

10%

Rework

10%

Tax

Adjustments

10%

Information

Gathering

25%

Stakeholders

Management

25%

Planning

17

“We always overestimate the change that will occur in the

next 2 years and underestimate the change that will occur in

the next 10. Don’t let yourself be lulled into inaction”

- Bill Gates

“God grant me the serenity to accept the things I cannot

change, the courage to change the things I can and the

wisdom to know the difference”

- Ignatius Loyola

18