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Asia Tax Forum

May 9-10, 2012 – Raffles, Singapore

TAX TRANSFORMATION – Unlocking the value of data, processes and people with TECHNOLOGY

Kim JaeSon Vice President, (Asia) Tax & Accounting Thomson Reuters

Presented by

Asia Tax Forum


PLANNING IFRS

BRAZIL

REPORTING

INDIRECT TAX

ACCOUNTING

CHINA

TRANSFER PRICING

INCOME TAX

COMPLIANCE OECD

AUDIT DEFENSE

HEAD OF TAX – A HEAD FULL OF RESPONSIBILITIES & CHALLENGES

Asia Tax Forum


CASH FLOW

COSTS

TAX RATE COMPLIANCE

RISK

METRICS THAT MATTER

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DATA PEOPLE PROCESSES

CHALLENGES IMPACTING EFFICIENCY ACROSS TAX OPERATIONS

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GLOBAL TAX TEAM

REQUEST DATA

FINANCE / IT

DEPARTMENTS

WAIT…

GAINING ACCESS TO QUALITY DATA

DATA CHALLENGES

Asia Tax Forum


PLANNING COMPLIANCE AUDIT ACCOUNTING

TAX FUNCTIONS DO NOT LEVERAGE WORK & CALCULATIONS,

DUPLICATED TIME IN COLLECTING AND MANIPULATING DATA

ACCESSING AND RE-USING VALIDATED DATA

DATA CHALLENGES

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INEFFICIENT TAX PROCESSES

PROCESS CHALLENGES

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DOCUMENT MANAGEMENT

PROCESS CHALLENGES

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DIFFICULTY COMPLYING WITH GLOBAL REGULATIONS

PEOPLE CHALLENGES

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TRAINING & RETAINING PEOPLE

INDIRECT TAX

CORPORATE TAX

PROVISION

TRANSFER PRICING

PEOPLE CHALLENGES

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ACHIEVING EFFICIENCY ACROSS TAX OPERATIONS

TAX TRANSFORMATION

Asia Tax Forum


TAX TRANSFORMATION

DATA

PEOPLE

TAX TECHNOLOGY: UNLOCK THE VALUE

PROCESSES

Asia Tax Forum


SOFTWARE SOLUTIONS FOR

GLOBAL TAX MANAGEMENT

CORORATE TAX COMPLIANCE

TRANSFER PRICING

TAXATION RESEARCH

TAX PROVISIONING WORKFLOW MANAGEMENT

TAX PROVISIONING WORKFLOW MANAGEMENT

INDIRECT TAX MANAGTEMENT

TAX TECHNOLOGY

Asia Tax Forum


TAX TRANSFORMATION

PLANNING

COMPLIANCE

AUDIT

ACCOUNTING

TAX LIFECYCLE:

POTENTIAL FOR RE-USE OF

INFORMATION AND DECISIONS

Asia Tax Forum


TAX TRANSFORMATION

STREAMLINE PROCESSES,

FREE UP STAFF TIME

ELIMINATE KEY

PERSON DEPENDENCY

IMPROVE QUALITY AND

ACCESSIBILITY OF DATA

IMPROVE VISIBILITY

AND CONTROL

REDUCE RISK

OF ERROR

DEMONSTRATE CONTROL

TO AUTHORITIES

HOW CAN TAX TECHNOLOGY HELP?

Asia Tax Forum


TAX TECHNOLOGY – INDIRECT TAX

INDIRECT TAX DETERMINATION

& COMPLIANCE TECHNOLOGY

Asia Tax Forum



BUSINESS PROCESS, SYSTEMS & TAX ENVIRONMENT

Legal Entities ?

AP Operations US EU LA ?

Tax Systems Custom/Native Excel Manual Tax App2 Tax App1

Ariba SFA CRM

Business

Systems Oracle ?

Home Grown

Legacy SAP

Applications Quote

Post-Purchase Process Sales Process Purchase Process

Inv AR OE Req PO AP FA Proj Inv.

Move ERS JE

✓

Interfaces

✓

✓

✓

= Tax decision-related codes, programming or logic ✓

Asia Tax Forum



A REAL DAY IN THE LIFE OF TODAY’S TAX (and IT) PROFESSIONAL

Determination Reporting Checking Filing Manual

Tax Policies

Remittance Global

Transactions

Manual

Tax Policies

What is really the Tax department’s main objective?

What are they (i.e. Tax & IT) currently doing?

What is the problem with what they are currently doing? And why?

Errors with manual tax decisions causes over-payments, under-payments, penalties & assessments

Tax decisions in multiple places offers no control or consistency with treatments.

Tax results data in multiple places slows down reconciliation, and increases the risk to the compliance and audit defense processes.

Tax and IT are burdened with ongoing changes in their ERP for analysis, possible changes and testing

Expansion into new territories exacerbates all of the above.

Liability

Data

Asia Tax Forum



INDIRECT TAX TECHNOLOGY – AUTOMATES THE DETERMINATION

SAP Oracle PeopleSoft E-Com Custom Legacy Billing

Req

uest

Res

po

nse

Excel

Compliance Data

Audit

Defense

Filing & Remittance Returns

Global Tax Engine

Tax Policy

Asia Tax Forum



INDIRECT TAX TECHNOLOGY – SUPPORTS ENTIRE PROCESS “END-TO-END”

Determination Reporting Checking Filing Manual

Tax Policies

Remittance Global

Transactions

Manual

Tax Policies

Liability

Data

Automated

Determination

Reporting Checking Filing Remittance Global

Transactions

Liability

Data

x BEFORE

AFTER

Global Tax Policy

x x x

Indirect Tax Determination Indirect Tax Compliance

x x

Asia Tax Forum



THINGS YOU NO LONGER HAVE TO DO

Check for changes to Tax Content

Schedule IT for changes to condition tables

Make changes to all applicable locations

Test changes

Manual tax determinations

Update cheat sheets

Train new Purchasing and AP personnel

New tax content source for new countries

Consolidate tax liability data for compliance

Consolidate tax liability data for audit defense.

Analyze planned acquisition impact on Tax

Prepare for operations in India and Brazil

Asia Tax Forum



• Continuous delivery of time-sensitive global tax content, research & changes: - Rates, rules and product taxability for more than 170 countries

• Continuous delivery of calculation method exception treatments: - Max tax, inclusive tax, tax-on-tax

• Continuous delivery of cross-border logic and rules: - Intra-community dispatch, acquisition, interstate transactions, triangulation rules

• Continuous delivery of anticipated updates: - Updates may occur mid-month or even next year

AKIN TO HAVING YOUR OWN GLOBAL TAX RESEARCH & CONTENT TEAM

Asia Tax Forum


CASE STUDY: CISCO SYSTEMS

CHALLENGES and REQUIREMENTS:

• Tax Challenges: - Tax consolidation and visibility a challenge with tax professionals and systems

distributed worldwide

- Central audit and compliance database needed to manage expansion into new markets

- Cisco needed a solution that could provide real-time global tax determination for each

transaction

• Technical Requirements: - A single, centralized tax solution that could connect to all systems worldwide with

scalability and performance capabilities necessary to support significant global

transaction business volume

• Business Requirements: - A solution that empowers Cisco’s tax professionals to quickly and easily implement tax,

business and system changes without requiring substantial support and custom

programming by IT

Asia Tax Forum


CASE STUDY: CISCO SYSTEMS

BENEFITS FROM INDIRECT TAX TECHNOLOGY:

• Improved tax department’s ability to respond rapidly and accurately to business

change – Cisco is now able to significantly increase the accuracy of sales, use,

and VAT determination on all sales and purchase transactions worldwide.

• Cisco now has real-time visibility and control through the identification of its

transaction tax exposures for all transactions worldwide. The time required for

returns processing is also reduced, thereby enabling more time for strategic tax

planning and analysis.

• Reduce unnecessary IT and tax costs – Cisco is able to reduce costs related to

system maintenance and increase responsiveness and efficiencies for its global

sales and procurement activities. The expensive-to-maintain VAT system used in

the past, is also eliminated.

Asia Tax Forum


TAX TECHNOLOGY – TRANSFER PRICING

OPERATIONAL TRANSFER

PRICING TECHNOLOGY

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CASE STUDY: FORD MOTOR COMPANY

TRANSFER PRICING LIFECYCLE

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CASE STUDY FORD MOTOR COMPANY

TRANSFER PRICING LIFECYCLE

Asia Tax Forum



CHALLENGES:

• 4 month process to calculate worldwide true ups: - Challenge getting information

- Not correct level of detail (6 to 8 weeks to get proper level – not immediately available)

- Excel process (access was advanced)

- No uniform approach or process (what accounts used different around the world – what

accounts were value adding, cost + markup – pensions)

- Many different types of transactions

• Out of sync with tax strategy: - Challenges forecasting

- Delay of actual results

• Costly results: - Overpaying in countries (Russia, Colombia)

- Quarter to quarter etr variances

- True ups

Asia Tax Forum



BENEFITS FROM OPERATIONAL TRANSFER PRICING:

• People: - Able to provide timely information not possible before

- Structure process worldwide

- Reduced time from 4 months to 4 hours

• Dollars: - Reduce audit risks, fines and penalties

- True forecast and tax planning (tighten ranges)

- Proactively manage internal prices to reduce overpayments

• Management Benefits: - Decrease ETR variances quarter-to-quarter

- Get information earlier to manage process better

- Quicker results allow true ups in provision

Asia Tax Forum


THANK YOU

asia tax forum may 9 - home | international tax … tax...asia tax forum may 9-10, 2012 – raffles,...

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