I130 - KPMG & Stanley Black & Decker Presents: Delivering Value Added Tax Solutions in SAP Ariba

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Fred BaumerKPMG Managing Director – State & Local Tax

Fred is a Managing Director in KPMG’s Transaction Tax Systems practice with over 19 years of experience in managing indirect tax technology projects.

Fred specializes in managing large scale projects for US based Fortune 500 high companies. Prior to joining KPMG, Fred managed IBM’s Indirect Tax Technology – integrating and sustaining indirect tax determination solutions.

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Pam BattleStanley Black & Decker Senior Manager – IT Business Services

Pam’s IT experience spans across tax, finance, procurement and accounts payable.

Pam leads a team of individuals who support SBD’s cloud installation of the ONESOURCE Indirect Tax Determination system as well as several other financial systems.

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Confidential and Proprietary

Objectives slide• Understand the interplay between SAP Ariba and OneSource Indirect Tax related

to VAT in Europe.

• Understand the benefits of leveraging a global template for indirect tax.

• Considerations when using OneSource over the native Ariba tax determination capabilities.

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Confidential and Proprietary

Agenda• Company Overview• Why ONESOURCE?• Implementation Project• Blueprint• Design Considerations• Questions

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For the builders and protectors, for the makers and explorers, for those shaping and reshaping our world through hard work and inspiration, Stanley Black & Decker provides the tools and innovative solutions you can trust to get the job done—and we have since 1843.

You repair your home and car with the tools we provide. Your car and your phone are secured with our fasteners. The things you value most can be protected by our security systems. And the roads you drive on, the bridges you cross, the energy you consume, all of these most likely came to you via one of our infrastructure systems.

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Confidential and Proprietary

Ariba & ONESOURCE at Stanley Black & Decker• Stanley Black & Decker has been using Ariba for

several years• To address indirect taxes in past Ariba

implementations SBD had used a combination of solutions:• Rates File from Thomson Reuters• Invoice parking• Manual processing

• SBD determined that the indirect tax solution wasn’t sustainable for a global deployment

• SBD evaluated their options for tax automation and determined that ONESOURCE delivered an integration and tax determination solution with global coverage

• SBD selected KPMG as their implementation partner for Ariba & ONESOURCE

Initial Deployment• 7 Countries in Europe• Ariba Network• Ariba P2P• Ariba Non PO Invoices• Ariba Guided Buying

Taxes Supported• Standard VAT• Reduced Rates• Out-of-Scope• Exempt Supplies• Reverse Charge• Acquisition Tax• Foreign VAT

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Confidential and Proprietary

Roles & Key Responsibilities

— Tax Project Management

— Tax Functional Leadership

— Business Process Analysis

— Tax Solution Design and Tax Engine Configuration

— ERP Integration Testing

— P2P-TAX Test Planning

— Tax Knowledge Transfer

— Tax Engine integration License

— Ariba integration

— Technical Trouble Shooting

— Tax Testing Support

— Invoice reconciliation Tax Handling

— Technical Trouble Shooting

— Develop transition plan for inflight Ariba transactions

— OK2PAY - Tax Data Mapping

— As needed, Ariba Configuration and tax engine data mapping

Team Based ApproachOur proposed model brings together the best of each solution element: KPMG’s tax functional expertise, Thomson Reuters technical integration and Ariba’s experience.

Advantages of the integrated approach

— Fit for purpose insights, capabilities, resources, and accelerators across each project discipline

— Integration of project plan, status reporting & issue / risk management approach

— Business-focused approach to a technology implementation

Source KPMG

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Confidential and Proprietary

Indirect tax across the procure to pay processThere are several indirect tax touchpoints to consider in the end-to-end procurement process

Validate taxes charged by suppliers Determine

accounting for vendor charged taxes and use taxes accrued

Ensure vendor set-up captures the

necessary information for

indirect tax compliance

Ensure users make

conscience decisions on

delivery location

Determine if the purchasing categories are detailed enough to

support tax determination

Ensure tax invoice

requirements are met

Ensure purchase transactions are

categorized correctly within the tax return

Establish business processes to validate

tax invoices for all invoicing methods

Identify the ERP tax code configurations to support tax

accounting

Establish tax tolerance / thresholds

Identify the entities &

registrations involved in purchasing

Clearly communicate to

the supplier applicable tax exemptions

Requisition OrderVendorManagement

Invoice Tax Accounting Tax Compliance

Source KPMG

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Confidential and Proprietary

ONESOURCE – Ariba Integration Overview

ONESOURCE connects directly to Ariba, through this integration you can enable:- Estimates indirect tax on your purchase order to notify your supplier of the expected tax amount (or tax exemption) as well as consider tax costs

in your project and department budgets.- Validation of supplier charged tax during the invoice reconciliation process- Accounting instructions to direct your ERP on the posting of the indirect taxes

ONESOURCE Integration

Requisition Order Invoice Tax Accounting

Entities Tax Registrations Product Taxability Exemptions Tax Rates Tax AccountingInstructions

Ariba

ONESOURCE

Considerations

• Set tax expectations with suppliers up-front

• Validate supplier charged tax before invoices are paid

• Automate the assignment of tax codes & tax accounting information

Source KPMG

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Confidential and Proprietary

ONESOURCE Global Tax for SAP Ariba Solutions

• The integration component contains logic to translate the request from SAP Ariba into a readable XML format for ONESOURCE and the output/response from ONESOURCE into a readable XML format for SAP Ariba.

ON

ESOU

RC

E AR

IBA

IntegrationLayer

Procure-to-Pay Indirect Tax Determination

Source System Request OneSource Request

Source System Response OneSource Response

Thomson Reuters CloudSAP Ariba Cloud Environment

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Confidential and Proprietary

Complexities of Indirect Procurement• Some of the challenges in the area of indirect procurement include:

Number of Users Purchase Categories Invoicing Methods

• Ariba is open to all company employees at every level of the organization.

• Considerations are needed in the design phase to ensure the solution is effective and easy to use.

• Assigning the correct purchase categories can be challenging especially for non-catalogue transactions.

• Designing (limiting) the commodity codes available in the Ariba system can simplify the process for end users.

• Ariba supports several invoicing methods: AN Invoices; cXML; and paper invoices and non-PO invoices.

• Understanding the invoicing methods in-scope will help to ensure the process is thoroughly tested.

Source KPMG

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Confidential and Proprietary

Phased Project Approach

‒ Define Product Category mapping

‒ Identify Ariba source fields for tax decision drivers

‒ Assess data / process gaps

‒ Document tax dependencies on ERP integration

‒ Identify Ariba configuration dependencies

‒ Review Ariba tax invoice configurations

Design Build Test DeployPlan

‒ Configure legal entities & registrations in tax engine

‒ Install Tax Engine Integration

‒ Tax Exception Handling

‒ Tax OK2PAY Data Mapping

‒ ERP OK2PAY Mapping

‒ OK2PAY - Tax Data Mapping**

‒ As needed, Ariba Configuration and tax engine data mapping**

— Develop test plans and test scripts

— Execute System Integration Testing

— Execute User Acceptance Testing

— Remediate testing issues

— Conduct go-live readiness review

‒ Prepare tax engine production configurations

‒ Support production environment Cut-over

‒ Prepare user training

‒ User training/knowledge transfer for tax team

‒ Perform high-level tax automation definitions

‒ Define key data drivers, risks and benefits

‒ Review purchasing categories & taxonomy

‒ Tax invoice requirements

‒ Tax project plan

‒ Define tax requirements

KPMG Indirect Tax Expertise

Source KPMG

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Confidential and Proprietary

Designing a Global Blueprint for Indirect Tax

‒ KPMG has long recognized the use of a global blueprint as key to a successful, efficient and cost-effective deployment of a global tax engine.

‒ An indirect tax blueprint serves a number of purposes; • It is key to a truly scalable design. • It is necessary to ensure that the design decisions for the solution don’t adversely impact any

planned or possible future global deployments. • It delivers true cost optimization and time savings as enabling global standards to be established so

that future roll outs can be deployed by reference to the delta between the requirements

‒ Our Approach for indirect tax blueprints:• Typically we develop the blueprint based on the high level tax and business requirements for 5 to 10

representative countries in the client’s business• This can be done in parallel with the initial country deployments • KPMG is able leverage a database of country tax requirements and the knowledge our tax technology

team

Source KPMG

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Confidential and Proprietary

Design ConsiderationsIn the design of the ONESOURCE and Ariba integration we’ll need to consider:

• Where and when to calculate the final tax amount (Ariba or your ERP)

• Timing of auditing (saving) data in ONESOURCE for tax compliance reporting

• The level of detail / tax levels to be used in invoice reconciliations for tax

• Purchase categories to be treated as pay-as-presented (e.g. telecom invoices)

Source KPMG

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Confidential and Proprietary

Effectively managing indirect taxes can be a challenging process – especially for companies that do business in multiple jurisdictions. Legislation is ever-changing and inconsistent across jurisdictions. In-house tax departments often do not have the process, controls, and governance or the technology to ensure that they are meeting indirect tax compliance requirements

Validating Indirect Tax – As suppliers invoices are reconciled in your Ariba solution several validations are performed to ensure the invoice is consistent with the agreed upon terms. Indirect taxes are no different, through a connection to a tax engine your company can validate the supplier’s charged tax to ensure suppliers are adhering to the local tax jurisdiction rules and the tax exemptions your company is entitled to are applied.

Tax Sensitizing the P2P process – a comprehensive implementation considers indirect tax needs in the design of:

• purchase categories

• compliant legal invoices

• policies for handling supplier indirect tax variances

A tax sensitize process & Ariba platform can be used to efficiently address the monthly tax compliance obligations of your company and establishes an audit ready solution.

Reduce Reliance on Manual Processes – without tax automation many companies rely on non-tax individuals in the P2P process to make decisions on the tax treatment of supplier invoices. This process can be automated to ensure your tax policy is applied consistently to your suppliers invoices and that your ERP system receives the correct information (tax rate areas, tax accounts) to facilitate a complete posting.

Creating value through indirect tax automation

Source KPMG

Questions?

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Confidential and Proprietary

Notice• Some or all of the services described herein may not be permissible for KPMG audit clients and

their affiliates or related entities.

• The following information is not intended to be “written advice concerning one or more Federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

• The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.

• The KPMG name and logo are registered trademarks or trademarks of KPMG International.

• © 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Source KPMG

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