EMEA TMC clientconferenceIndirect tax - deliveringbest in class compliance ina Global business services(GBS) environmentThe Crystal, London9-10 June 2015
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• The Current landscape
• The push to centralisation
• Stakeholders & governance
• Components of compliance
• Executing on a strategy
Agenda
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In Deloitte’s 2014 indirect tax clientsurvey, our clients identified indirect taxcompliance as their number 1 priorityarea.
Only 30% of respondents to our globalcompliance survey were happy that theircentralised compliance processes wereefficient.
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The currentlandscape
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Pressures on indirect tax teams
VAT is a big number
Imposed risk managementregimes such as Senior AccountingOffices (SAO)
Public scrutiny and boardroom attention
Behaviour-based penalty regimes
Desire to “do more” withthe same resources
New resourcing and deliverymodels such as shared servicecentre (SSC/GBS)
Increasingscope of‘indirect’
taxes
More to manage alongside greater scrutiny over performance and compliance
The taxteam
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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
Local Regional Global
Maximum automation
One function Multi-function
Little sharing Full integrationCo-location
Transactional and advisory
Two to three functions
Transactional
SSC geographical scope
Degree of automation
Functional scope
Degree of functionalintegration
Degree ofvalue add
Outsourcing model Decentralised Coordinated, consolidated Centralised, Integrated
Prepared by separate localcountry teams
With ad-hoc use of advisors oncountry by country basis
Tax and statutory accountsprocesses aligned
Co-ordinated global outsourceworking with SSC
Shared service team prepares taxreturns and statutory accounts
Local support for quality assuranceand specialist input
Tax and statutoryaccounts
Operating model
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The push tocentralisation
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Market research - compliance focus
Relative importance of factors in %
Current global compliance drivers for organisations and their management
* Global tax management consulting (TMC) market research conducted by Deloitte – December 2014
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Market research - compliance focus
(% Happy)
Satisfaction with the current model for managing all global compliance
Delivered andmanaged locally
Delivered ocally,managed centrally
Delivered andmanaged centrally
Method 1Decentralised
Method 2Co-ordinated
Method 3Centralised
* Global tax management consulting (TMC) market research conducted by Deloitte – December 2014
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Market research - compliance focus
21% 14% 7% 5%
Indirect taxreturns andpayments
Global taxprovision
Statutoryaccounts
Corporate incometax returns and
payments
Specific issues…
Does not perform as well for…
• Lack of control;monitoring; management
• Complications of localknowledge
• No central strategy
• Lack of control;monitoring; management
• Lack of communicationfrom external partners
• Lack of skills/ expertise
• Lack of control;monitoring; management
• Less focus on theseareas
• Problems with datacollection/ integration
• Lack of control;monitoring; management
• Lack of communicationfrom external partners
• No central strategy
• Lack of skills/ expertise
Satisfaction with the current model for managing all global compliance
* Global tax management consulting (TMC) market research conducted by Deloitte – December 2014
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Market research - key messages
• More centralised operating modelsbeing deployed but the degree of‘enthusiasm’ varies by process
• Increased use of selective outsourcing tocomplement the in-house team and as acatalyst for wider improvement or eventransformation
• The focus is now on more consistentglobal processes and quicker, simplerdelivery, often through the better use oftechnology
* Global tax management consulting (TMC) market research conducted by Deloitte – December 2014
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Stakeholders& governance
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Who are your stakeholders?
Indirect tax
Taxauthorities
Internalaudit
Regulators
Businessunit leadersand finance
staff
Externalauditors
Widertax
function
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• In some respects centralised compliance makes stakeholder managementeasier but it does demand more formality
Satisfying your stakeholders
Document processesand controls for
completing indirecttax returns
Agree and publishguidelines for dealingwith tax authorities inaudits, assessments
and disclosures
Implement a processfor identifying andreviewing high risk
countries/registrations
Document and dataretention guidance
Regular review ofindirect tax affairs toquantify risk areas
Reporting keyperformance metrics
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Introducing the Operating Model LayersShaping your indirect tax governance model
Level 1 –Strategicdirection
Level 2 –Key tax &reportingactivities
Level 3 –Supportinginfrastructure
Compliance strategy based onneeds of key stakeholders, clearly
communicated goals, roles andresponsibilities, governance
standards
Defined compliance processesand controls for tax and reportingactivities by business division and
function
Infrastructure which supports andmonitors compliance controls allactivities, creating visibility over
tax compliance for group taxfunction
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Componentsof compliance
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The components of centralising compliance
People Knowledge Processes Technology
Local expertise
Centralisation of compliance
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The right mix of peopleAn 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 andtest data, submit returns, adapt systemsand handle relationships with widerbusiness and local tax authorities
PeoplePeople
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Knowledge is a key to success
Periodical newsletters
Strong tax technical knowledgePractical “problem solving”
experience
Innovative EMEA taxtools
EMEA tax matrix andoverviews
Updated tax informationper country
Expertise Co
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Continuous professional training
Regular updates of knowledge databases
Knowledge
Knowledge
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Reliable processesProcesses
Processes• Important to recognise what
‘compliance’ encompasses
• Preparing the return is a single step in thecycle
• Centralising compliance will surface painpoints that need to be addressed
• We’re becoming more adept at segmentingand aligning steps across processes
• Styles of process improvement lookdifferent across businesses but key stepsare often common
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Technology trends
• VAT compliance technology market still evolving:
− A few more ‘international players’ although plenty of room for more!
− 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
• The systems for managing the tax process, key performanceindicator (KPI) data and document management arebecoming ‘standard’ in many tax functions, but adoption andapproach vary from group to group.
ProcessesTechnology
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A case in pointProcessesTechnology
People
Knowledge
Processes
Technology
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Executing on astrategy
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Consider VAT’s position within the wider businessConsider VAT’s position within the wider business
Identify your key stakeholders and determine how to work with themIdentify your key stakeholders and determine how to work with them
Take stock of what technology solutions are already available in the GBS andacross your tax groups: you may have more to play with than you expectTake stock of what technology solutions are already available in the GBS andacross your tax groups: you may have more to play with than you expect
Focus on complementing and improving current processesrather than disrupting themFocus on complementing and improving current processesrather than disrupting them
Don’t overcomplicate things: it puts adoption of change at riskDon’t overcomplicate things: it puts adoption of change at risk
Technology is not a ‘silver bullet’. Sustainable improvement takes careand effortTechnology is not a ‘silver bullet’. Sustainable improvement takes careand effort
There’s more than one route to ‘best in class’There’s more than one route to ‘best in class’
Executing your strategy
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