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EY Global Indirect Tax Symposium 2016
20–22 April
Data analytics
Page 2
PanelKaren ChristieUnited States
Marc BunchHong Kong
Colm HalpinIreland
John SlootNetherlands
Data analytics
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Agenda
► Introduction► Leading today,
► VAT and GST analytics► Trade data analytics
► Leading tomorrow► Questions
Data analytics
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Introduction
Data analytics
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Introduction
► In this era, multinational companies cannot afford not to seek support from tax technology.► The transactional nature of indirect taxes makes technology even more critical.► Within the different indirect taxes we are converging our data requirements and technologies, we
continually see that convergence into other taxes and beyond.► The purpose of the session is to demonstrate what is leading in data analytics today and what we see as
leading tomorrow.
Data analytics
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Leading todayEY VAT and GST data analytics
Data analytics
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VAT data analytics
An effective approach to data analytics is crucial in gaining and maintaining control of your VATfunction.► Planning ideas: process improvement and new business opportunities► Compliance: easy reporting of various VAT requirements► Accounting: easy in-house general VAT understanding and recording► Controversy issues: use of data analytics and data audit trails for VAT audit defense
Cash savingsUnclaimed VATOverpaid VAT
Wrong rate
Prior exposureUnpaid VAT
Overclaimed VATWrong rate
Process errorsIncorrect tax codesManual procedures
Supply chain improvementsVAT overview (supply chain mapping)
Cash and cash flow improvements
VAT dataanalytics
Data analytics
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VAT data analyticsTrends
► Landscape:► Increased use of data analytics to manage global VAT effectively:
► Current-state analysis - strong insights into the effectiveness of the current process► Identification of potential cash tax savings► Improvements in working capital and cash flow► Root cause analysis for errors and remediation plan► Root cause for process inefficiencies► Business case for supply chain enhancements► Improvements in business processes
► Trends:► Increased use of visualization tools► In-house development of flexible and scalable data analytics solutions
Data analytics
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VAT data analyticsEY approach
Data analytics
Indirect tax returns
Data analytics and exceptionreporting
Data drill-down
Trend analysis
Management reporting
Self-serve reporting
Automated return preparation, including summarization and mapping of data to returns,adjustments and data analysis
Automated data analysis to identify errors and anomalies through predefined or user-defined data validation and queries
Ability to drill down from summarized to transaction level data to enable detailed analysis
Visual trend analysis to monitor key indirect tax numbers (e.g., VAT throughput andirrecoverable input VAT) over time
Dashboard reporting and visual output providing visibility to global indirect tax data tofacilitate governance and management decisions
Ability to query and report using any data elements and across entities, countries andregions to support analysis and response to internal and external queries
► Functionality determinedby client requirements
► Expandable over time, toprovide a fully scalablesolution
Page 10 Data analytics
Demonstration
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Leading todayEY trade data analytics
Data analytics
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EY trade data analytics
► Trade effectiveness: the ability to access markets faster, better and cheaper► Trade data analytics: the process of harvesting key trade data and extracting insights and opportunities
to improve trade effectiveness
Data analytics
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EY trade data analytics
► All aspects of trade are now electronic, and richdata is available:► Internal – ERP data► External – customs and customs brokers
► 100+ projects primarily using historic customsand broker data:► Global experience - in 40+ countries► Rich - can be 80+ fields per line► Unique - combines multiple sources► Accessible external -means reduced client effort
Visualization
Testing and modeling
Normalization
Customs Broker ERP Other
External Internal
Recent developments in convergence with VAT analytics on import VAT
Data analytics
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EY trade analytics outcomes
► Faster – assessment of customs process performance and improved trade compliance to reduce supplychain intervention and help achieve AEO status
► Better – define current-state and model future-state physical and financial supply chain variables toimprove and sustain operating and tax model effectiveness
► Cheaper – direct trade cost savings:► Customs – e.g., FTA sourcing and landed cost improvements, government trade programs, bonded facility
modeling, import VAT recovery reconciliation and HS classification inconsistency► Operational trade – e.g., sourcing consolidation, supplier contract performance, transport mode and routing
analysis and sourcing, transport insurance renegotiation and customs broker service levels
Data analytics
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Typical EY trade data analytics program
Data analytics
Data analytics DashboardsSQL database
External data
Broker systems
Customs
OutcomesActions
Stakeholders
Acquire Normalize Analyze Visualize Assess Implement
Stakeholders
Monitor
ERP data
Page 16 Data analytics
Demonstration
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Leading tomorrowTransactional data analytics – closing the loop
Data analytics
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Leading tomorrowTrade and VAT solutions
Data analytics
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Some initial thoughtsBackground to advanced trade and VAT analytics
As more trade data becomes visible and can be analyzed and actedon, the next question is: what is the best way to translate this intobusiness value?
Key areas of trade cost andcomplexity:► Transport and logistics► Customs duties and taxes► Brokerage and trade compliance
management► VAT leakage
Business decisions areas with tradeconsideration or implications:► Direct procurement and “landed cost” based
decisions► Network redesign► Low cost sourcing and “localization”► Other supply chain changes – depots, multi-
modal supply points, pricing (TP changes),commercial terms, etc.
► Transfer pricing and adjustments
Relevance –which
stakeholders canwe bring the
most benefits to?
Vision – what will the tradedata function look like in
three years?
Direction – howdo we move fromwhere we are not
to where weneed to be in the
future?
Data analytics
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VisionKey drivers for a digitally enabled trade organization
Cost
IntegrationBusiness value
Reduce cost and unlock savings► Operate a more efficient trade cost structure
► Reduce business fatigue caused by monitoring and complianceactivities
► Automate compliance and reporting where possible
► Identify potential operational efficiencies and cost savings for trade
Integration► Align to wider digital and cross-business initiatives
► Increase and harness value of digital data for trade flows
► Increase internal and external stakeholder confidence oftrade organization and value to the business
► Deliver global consistency and quality
Business value - be a business partner, not just the “trade police”► Be more strategic in focus; help the organization achieve its business objectives
► Bring more business insight; provide subject matter expertise
► Help design the future-state global footprint
► Improve supply chain and drive costs savings
► Develop talent and future business leaders (i.e., feeder of talent to the business)
Current state Desired future-statecoverage
Data analytics
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VisionOutcome - moving up the value chain
Data analytics
The digitally enabled trade organizationMove from a compliance-focussed trade organization to a forward-looking
organization that drives real savings and differentiation
► Improve supplychain and tradeagreements
Improve
► Trade as a keybusiness partnerenabling proactivebusiness benefits
Differentiation
► Focused analysis toidentify and capturesavings and reducecosts
Identify Savings
► Profiling► Dashboards► Measure spend
and opportunity
Visibility
Compliance► Keep us out of
trouble
Done
Started
Not started
Maturity
Valu
e
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RelevanceMatching data and insights to stakeholders and business value
Managedata
Performanalytics
Drivedecisions
Deliverbenefits
To drive better outcomes, the key is to define the outcomes, ask the right business questions andthen seek answers in the data: hence the move from right to left.
Descriptive analytics
Mine past data to report, visualize, andunderstand WHAT has already happened –after the fact or in real time.
Predictive analytics
Understand the underlying relationshipbetween data inputs and outputs to understandWHY something happened and/or to predictWHAT will happen in the future across variousscenarios.
Prescriptive analytics
WHICH decision or action will produce themost effective result against a specific set ofobjectives and constraints?
ERP
Data systems
GTM systems
Broker data
Government data
Procurement team
Freight forwarders
Freight payment
Data-driventrade
organization
FCPA andreputation
M&A
Tax-tradeimprovements
Supply chainoperations
Logisticsmanagement
Complianceand BEPS
Data analytics
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Information lifecycle management
Master data, metadata and data governance
AnalyticsData acquisition
Reporting and analytics
Visualization
Advancedanalytics
Financial andoperationalreporting
Insights
Batch
Real time
Enterprise data platform/big data environment
Operational data martswith conformed dimensions
Data repository
Tools
Sandboxes
Archive
Staging Discoveryplatform
In-platformanalytics
Securityand audit
Dataintegration
Backup/DR
Dimensionalstaging
Data integration
Big data-enabling analytics
Structured data(internal and externalsources – ERP, CRM,GTM, tariff data andT&L data)
Unstructured or semi-structured data(internal and externalsources – customs andbroker data and email)
Data discovery
How the digital trade and VAT organization can be builtTechnology: sample architecture
Data analytics
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Leading tomorrowTransactional data analytics – an integrated approach
Data analytics
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Transactional data analytics
► With tax authorities increasingly working across functions, companies must anticipate andprepare for a different approach toward tax audits.
► The interaction between transfer pricing, global trade and VAT cannot be left unnoticed.► We are bridging the different areas and aligning different functions in companies.► The result is transactional data analytics.
Data analytics
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ITX data analytics is a flexible and scalableframework designed for structuring,executing and monitoring trade acrossmultinational enterprises.ITX analytics is designed to achieve thefollowing objectives:► Increase efficiency► Manage compliance and risk► Drive business value
Transactional tax analytics: a structured approach to transferpricing, VAT and customs management
Data analytics
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Reoccurring process
Planning andpolicies
1Price setting and
contracts
2Transactions and
journal entries
3Monitoring and
adjusting
4Testing andcompliance
5Controversy and
litigation
6
Mapping oftransactions
Setting transfer prices
Price upload andvalidation
Local budgets andforecasts
Grouping ofcompanies
Acquired companies
Documentationstrategy
Benchmark studies
Transfer pricing policy
Goods and services
Journal entries in ERP
Creation and changes totransfer prices
Monitoring andreporting
Updating ofdocumentation
Adjustments
TP policy check
Check compliance
Review of localdocumentation
Documentation review
Controlledtransactions form
Strategy
Information retrieval
Audit cyclemanagement
APA and rulings
Intercompanyagreements
Controlling of internalsales of services
* Sample activities across the operating life cycle
Condition table setup
Tax code determination andaccounting
… Focusing on integration across the business processesthrough technology and data enablement
Data analytics
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Step 1 – Data extraction from financial systemsStep 2 – Multi system data staging, TP transaction data harmonization, TP attribute, master data sensitization, etc.
Pricing
Technology and data
Consolidation andreporting systems
Bolt-on TP systems
ERP systems
Sample information systems architecture
SAP transactional
Presystems
Order Management Procure-ment
Production Finance
Human resources
Others
Controlling
ERP systemsCRM systemsCampaign Management Quotation Management
Opportunity Management Sales Planning
SRM and SCM systemsSourcing & contract management Demand planning
Supply planning Category management
SAP business intelligence
SAP business warehouse
Barcode scanningsystem
Work progressmeasurement system Order management system Time recording system Others
SAP business objects: transfer pricing reporting
Harmonized TP transactions► Finance (GL)► Revenue, COGS and production
TP master data► Legal entity► Revenue/COGS based► Management attributes
TP attributes► Trading partner► TP supply chain► FX – currency translationDSO DSO DSO DSO DSO DSO
BPF workflowreview and approve - reports
Transfer pricing analysis (BPC)
TP analysis
TP JE Planning Forecasting
Drill-down BEx BO - dashboard Slice/dice EPM BO - crystal
TP workflow
BPC-BPFBW – information broadcast
TP document managementBPC documents
EPM cell attachments
Tax applications
Tax provision Tax provision
3
4 3
2
1
Transactional data analytics: the proposition in practice
Data analytics
Step 3 – TP logic, workflow and analysisStep 4 – TP reporting and TP document management
AM15
Slide 28
AM15 Procure-ment" looks like a typo. Should be "Procurement"Alan Millar, 04/05/2016
Page 29
Transactional data analytics: what does bring?
Data analytics
Sample Information Systems Architecture
SAP transactional
Presystems
Order Mgt Procurement
Production Finance
Human Resources
Others
Controlling
ERP systemsCRM systemsCampaign Management Quotation Management
Opportunity Management Sales Planning
SRM and SCM systems
Sourcing & Contract Mgt Demand Planning
Supply Planning Category Management
SAP Business Intelligence
SAP businesswarehouse
Barcode ScanningSystem
Work ProgressMeasurement System Order Management System Time Recording System Others
SAP Business Objects: Transfer Pricing reporting
Harmonized TP transactions► Finance (GL)► Revenue, COGS and production
TP master data► Legal entity► Revenue/COGS based► Management attributes
TP Attributes► Trading partner► TP supply chain► FX – currency translationDSO DSO DSO DSO DSO DSO
BPF workflowReview/Approve - Reports
Transfer Pricing Analysis (BPC)
TP Analysis
TP JE Planning Forecasting
Drill-down BEx BO -Dashboard Slice/Dice EPM BO - Crystal
TP Workflow
BPC-BPFBW – Information Broadcast
TP Document Management
BPC DocumentsEPM Cell attachments
Tax Applications
Tax Provision Tax Provision
3
4 3
2
1
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Questions
Session Title
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