Assessing value in digitally enabled business operating models. #FutureOfTax

Transcription

1 Assessing value in digitally enabled business operating models #FutureOfTax

2 With you today Kirsty Rockall Partner, Global Transfer Pricing Services Tim Sarson Partner, Global Transfer Pricing Services Kashif Javed Partner, International Tax 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 2

3 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 3

4 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 4

5 What is value creation? Development Enhancement Underlying principle for transfer pricing is that profits should be taxed where value is created However, in a digitalised world, it is not always clear: What the value is, How to measure it, Or where it is created Maintenance Protection How to capture activities which are increasingly based on intangible assets and data? Exploitation Where is value created? 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 5

6 KPMG s view on value creation KPMG s VCA approach is increasingly useful in post-beps world A new approach is needed to transfer pricing post-beps Increased focus on people substance/functions Create/analyse coherent value creation narrative, reflecting current commercial environment Focus on the big picture Evidence that Risk control thresholds are met to respect transaction/entity characterisation Practical approach which helps articulate tax/tp model to key stakeholders 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 6

7 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 7

8 Case study 1: Traditional business with increasing digital aspects

9 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 9

10 Business model canvas example: Retail (and the new normal) Key resources Warehouses, Omni-Channel Sales & Service Outlets Brand(s) Equity, Merchandising & Sales Groups, Customergenerated Content (e.g., reviews, YouTube Videos, Instagram posts, etc.), Sales & Search Data History Value propositions Price Product Selection Convenience Customer service Customer relationships Automated or In-store Self Service Online/Mobile/Virtual Search Sales & Service Experiential Cost structure Product Inventory Operating Costs Advertising / Promotion (across all media physical and digital) Channels In-store Catalog/Mail Order Internet/Mobile Key partnerships Suppliers/Vendors Brand Alliances Customer segments Mass Market Specialty/Niche Individually customized/on-demand Key activities Merchandising, Procurement, Marketing, Advertising, Store (physical & virtual) Design, Real Estate, Customer Service, Customer Engagement (e.g., check-ins, reviews, ratings, Instagram posts), Data Analytics Revenue streams Retail Sales Monetisation of Customer Data Leveraging of Infrastructure to support other markets 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 10

11 Case study 2: Fully digital business

12 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 12

13 Business model canvas example: Virtual reality streaming Key resources Record labels Brand Wide range of music and artists Venues User data Value propositions Volume of content The quality and variety of platform artists Potential reach (advertisers) Technology compression and platform Technology content capture Customer relationships Key customer base of tech-literate, musicaware consumers Online Community Peer to peer Cost structure Content development costs Content production costs Royalties Employees Technology development costs Channels Gaming devices Direct to consumer apps Key partnerships Artists Record labels Venues VR/Gaming manufacturers Customer segments Mass market On-demand vs subscribers Advertisers? Key activities Content clearance Production Post-production Technology development Revenue streams Customer purchases Data Artist promotion Advertising revenue? 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 13

14 Q&A

15 Thank you

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