AT A GLANCE

Tax Challenges• Streamliningand

integratingtransactiontaxprocesseswithitsfinanceapplications

• Automatingprocesseswithmultipledatasources

• Maintainingdataformorethan1,500taxcodes

• Managingbusinessprocessestosuitbothinternationalandspecificlocalneeds

Results• Abletoapplynewrate

adjustmentsrapidly• Reducedthenumberoftax

filingsandadjustmentstofilings

The CustomerLenovowasformedwhentheChina-basedLenovoGroupacquiredIBM’spersonalcomputingdivisionin2005,becomingapersonalcomputergiantwithtaxoperationsin65countries.Lenovoisnowagloballeaderindeveloping,manufacturing,andmarketinghigh-qualitycomputerproductsandservices.

LENOVO, INC.Integrating Transaction Tax Solutions Globally for the New WorldDespitethechallengesofmaintainingcompliancewithcross-bordertaxrequirementsanddeterminingsalesandusetax,goodsandservicestaxes(GST),andvalue-addedtaxes(VAT),it’sstillpossibletotakecontroloveryourcompany’staxstrategies.Lenovo,oneoftheworld’slargestmanufacturersofpersonalcomputers,overcamethelogisticandgeographicchallengesofconsolidatingcorporatetaxprocessestoachieveglobalalignmentofitstaxstrategieswithbusinessprocesses.

Ofcourse,implementingaglobal-taxsolutionwhenoperationaldowntimeisn’tanoptiontakesdiligentplanningandaphasedapproachtoexecuteglobaldeployments.ThiscasestudyhighlightstheintegrationofLenovo’scentralizedglobal-taxsolutionwithitsbusinesssystems,andexplainshowoneofthemostinnovativemanufacturersofpersonalcomputingtechnologyisnowabletotransformitsglobalfinanceoperationsbyleveragingenterprisetransaction-taxmanagementsolutions.

LenovoistransformingitsfinanceoperationsbyusingONESOURCEIndirectTax,aswellaslimitingthetimeitsITdepartmentneedstobeinvolvedinprogrammingwhenchangesintaxrulesandratesoccur.

A GLOBAL BUSINESS WITH GLOBAL CHALLENGESWhenLenovoacquiredIBM’spersonalcomputingdivisionin2005,itbecameatrueglobalbusiness,withstrongconsumerandemergingmarketleadershipandanefficientsupplychain.Today,thecompany’ssalesorderandmanufacturingprocessesaredistributedaroundtheworld,withprincipaloperationsinMorrisville,NorthCarolina,Beijing,Paris,andSingapore,andmanufacturingfacilitiesinChina,India,Poland,andMexico.Lenovo’snewglobalpresencemeansnewopportunitiesforgrowth,moreagilemanufacturing,andmorecomplextaxes.Thechallengewastostreamlineandintegratethecompany’stransactiontaxprocesseswithitsfinanceapplicationsonaglobalbasis.

INTEGRATING ONESOURCE INDIRECT TAX WITH SAPLenovousesSAPasitsenterpriseresourceplanning(ERP)system,butrequiredasolutiontoautomatethedetermination,calculation,andrecordingofU.S.salesandusetaxandinternationalVAT.AlthoughSAPcancalculatestandardtaxrates,therewereotherglobaltaxcompliancechallenges,suchasconstantlychangingtaxratesandrulesacrossmultiplecountries.“WewerelookingtoextendthetaxdeterminationpowerofSAP,”saysDennisCulin,directorofbusinesstransformationatLenovo.“Wewantedtouseasimple

ONESOURCE® CaseStudy

“We wanted a single set of rules that the tax department could control — not IT, and not the end user — to make sure that our tax liability was accurate.” DENNIS CULINDirector of Business Transformation

inMexico,Poland,andBrazil.“Thenwe’llcontinueonournextstepsanddeployintheAmericasandEMEA,”saysCulin.“Basically,we’removinga$16billioncompanyontoitsownbusinesssystems,andwe’vehadtodothatwithlimiteddowntimetomakesurethatourcustomerneedswerebeingmetwhileweweredeployingourstrategicsoftware.”

NEW THINKING FOR A NEW WORLDLenovo’sslogan,“newworld,newthinking,”isaperfectwaytosumupthecompany’sapproachtotransactiontaxes,saysCulin.“We’retryingourbesttobringnewthinkingtothisnewdigitalworld,sowe’reworkingwithpartnerslikeSabrixtocollaborategloballyandtodelivervaluebycombiningthestrengthsofmultipleculturesandembracingemergingmarkets,”heconcludes.

ONESOURCE CASE STUDY

“Now that we’ve completed what we call our global solution design, we’ve configured Sabrix so that our transaction tax processes areextremely well defined.” DENNIS CULINDirector of Business Transformation

system,asinglesetofrulesthatthetaxdepartmentcouldcontrol—notITandnottheenduser—tomakesurethatourtaxliabilitywasaccurate.”

LenovoselectedONESOURCEIndirectTax,whichinterfaceswithSAPtocentralizetaxdeterminationandprovideasinglecompliancedatabaseforU.S.andinternationaltransactiontaxes.

“Weneedtomakesureourtaxabilityiscalculatedcorrectlythefirsttime,withouthavingtorecalculateorfixthingsonthebackend,”saysCulin.“Wealsowantedtoavoidoratleastlimithumaninterventionwiththetaxdetermination.Theusershouldnothavetomakeadeterminationontaxabilitybygoingthroughandpickingataxcode.Weneededasystemthatwouldmakethatdeterminationbasedonpredefinedrulesestablishedbyourtaxdepartment.”

Lenovo’stransactionalandmasterdataisalwaysinterfacedfromSAPtoONESOURCEIndirectTax,whichmeansthattaxdecisionsaremadebyONESOURCEIndirectTax,butthemasterdataandrelatedmappingtablesremainwithintheERPsystem.“WewantedallthesourcedatatobeinSAP,andthentransmittedovertoSabrix*,”explainsCulin.“Thisway,thecalculationscanbemade,storedintheauditdatabase,andthenthelogisticsrecordsaresentbacktoSAPandstoredthere.”

TheONESOURCEIndirectTaxintegrationforSAPinterfacesupportstaxcallsfromsalesanddistribution(SD),materialsmanagement(MM),andfinancial(FI)modulesofSAP.“WeusegenericinputandoutputtaxcodesthatarenotratespecifictocallSabrix,”saysCulin.“Weusetwotaxcodes—oneforpurchasesandoneforsales—andeverythingtransfersoverintoSabrix,sothatwecanmakesurethatthedecisionisalwaysmadethere.”

ONESOURCEIndirectTaxholdsallnecessarytaxratesandexemptionsandautomaticallydeterminesaddressjurisdictionforvendors,customers,costcenters,andplants.“WealsolinktoSAPCRMtodooursalesquotesandinvoices,”saysCulin.

“Wheneverwetakeaquoteormakeanorder,SAPCRMwillmakeataxcalltoSabrixtomakesurewe’veputthecorrectvalueonthequoteororder.Inmostofthecountrieswherewedobusiness,we’realsoimplementingcompleteecommercecapabilities,andwe’redoingsalesquotes,orders,andinvoicesinthatenvironmentaswell.Andagain,thecallisbeingmadetoSabrixanytimeatransactionischangedorsaved.”

Inadditiontotrackinginputandoutputtaxes,importandexport,andrevenuecharges,LenovoisusingcustomcapabilitieswithinONESOURCEIndirectTaxtoautomaticallydeterminetransactionalenvironmentalhandlingfeesrequiredbycustomsauthorities,savingadditionaladministrativetime.

ThefinanciallytransformedLenovoisnowusingONESOURCEIndirectTaxatitsoperationsinChina,Singapore,India,andCanada,andisintheprocessofgoinglivethroughouttheAsia/Pacificregion.

“ThemajorityofactivityinourtaxworkiscontrolledbyourtaxdepartmentwithinSabrix—it’snotcontrolledortouchedbySAP,”Culinreiterates.Lenovo’soperationalheadquartersinSingaporeservedastheprovinggroundfortheONESOURCEIndirectTaxsolution.“Nowthatwe’vecompletedwhatwecallourglobalsolutiondesign,we’veconfiguredSabrixsothatourtransactiontaxprocessesareextremelywelldefined.Goingforward,deployingthesolutiontotherestofthecountriesinwhichwedobusinesswillbemucheasier,andwe’llbeabletotakemoreofa‘cookie-cutter’approach—onlylocalizingasrequired.”

LenovowillsoonrolloutONESOURCEIndirectTaxtoitsmanufacturingfacilities

*SabrixwasacquiredbyThomsonReutersinDecember2009.

© 2013 Thomson Reuters/ONESOURCE. All Rights Reserved.

ONESOURCE_Lenovo_CS_01-2013_100

ABOUT THOMSON REUTERS ONESOURCE INDIRECT TAX

ONESOURCEIndirectTaxispartoftheTax&AccountingbusinessofThomsonReuterswithsolutionsdesignedtohelpcompanieseffectivelyandefficientlycomplywiththegrowingcomplexityofindirecttaxrequirementsaroundtheworld,includingsalesandusetax,VAT,GST,andindustry-andcountry-specifictaxes.

TheONESOURCEIndirectTaxsolutionwasformedfromthreerenownedbrands:Sabrix,AbacusVATCompliance,andONESOURCESales&UseTax.ONESOURCEIndirectTaxoffersend-to-endglobalsoftwaresolutionsandconsultingservicestostreamlinetaxplanning,indirecttaxdetermination,calculationandreportingprocesses,andlocaltaxcomplianceforsmall-tomedium-sizedbusinessesandglobal2000multinationalcorporations.

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