Deloitte Shared Services, GBS & BPO Conference Indirect Tax: Delivering Best-in- Class Compliance in a GBS Environment

Transcription

1 Deloitte Shared Services, GBS & BPO Conference Indirect Tax: Delivering Best-in- Class Compliance in a GBS Environment Christophe de Waele & Demian de Souza, Deloitte September 2015 Berlin, Germany

2 Contents The Current Landscape The Push to Centralisation What Others are Saying Stakeholders & Governance Components of Compliance Executing on a Strategy 2

3 In Deloitte s 2014 indirect tax client survey, our clients identified indirect tax compliance as their number 1 priority area. Only 30% of respondents to our global compliance survey were happy that their centralised compliance processes were efficient. `

4 The Current Landscape

5 Pressures on indirect tax teams VAT is a big number Increasing scope of indirect taxes Behaviour-based penalty regimes Imposed risk management regimes such as SAO The tax team Desire to do more with the same resources Public scrutiny and board room attention New resourcing and delivery models, such as SSC/GBS More to manage alongside greater scrutiny over performance and compliance

6 Operating model evolution The evolution of compliance strategy from discrete functionaland country-based models to integrated, global and cross functional services Operating Outsourcing model model Decentralized Coordinated, consolidated Centralized, Integrated Degree of automation Limited automation Medium automation Maximum automation SSC geographical scope Local Regional Global Degree of value add Transactional Sharing of tools and processes Transactional and advisory Functional scope One function Two to three functions Multi-function Degree of functional integration Little sharing Co-location Full integration Tax and statutory accounts Prepared by separate local country teams With ad-hoc use of advisors on country by country basis Tax and statutory accounts processes aligned Co-ordinated global outsource working with SSC Shared service team prepares tax returns and statutory accounts Local support for quality assurance and specialist input

7 The Push to Centralisation

8 Market research - Compliance focus Current global compliance drivers for organisations and their management Relative importance of factors in % * Global CRS Transformation survey conducted by Deloitte December 2014

9 Market research - Compliance focus Satisfaction with the current model for managing global compliance (% Happy) Method 1 Decentralised Method 2 Co-ordinated Method 3 Centralised Delivered and managed locally Delivered locally, managed centrally Delivered and managed centrally

10 Market research - Compliance focus Satisfaction with the current model for managing global compliance Does not perform as well for Indirect tax returns and payments Global tax provision Statutory accounts Corporate income tax returns and payments 21% 14% 7% 5% Specific issues Lack of control; monitoring; management Lack of control; monitoring; management Lack of control; monitoring; management Lack of control; monitoring; management Complications of local knowledge No central strategy Lack of communication from external partners Lack of skills/ expertise Less focus on these areas Problems with data collection/ integration Lack of communication from external partners No central strategy Lack of skills/ expertise

11 Market research - Key messages More centralised operating models being deployed but the degree of enthusiasm varies by process Increased use of selective outsourcing to complement the in-house team and as a catalyst for wider improvement or even transformation The focus is now on more consistent global processes and quicker, simpler delivery, often through the better use of technology

12 What Others are Saying

13 What is your organization's approach to VAT compliance? ONESOURCE Indirect Tax Compliance 3% Vertex 1% JD Edwards 3% Other 10% Microsoft Dynamics 1% Centre of Excellence 4% Outsourced to a third party 6% SAP 23% Microsoft Excel 43% Other 4% Global tax department 19% Centralised 41% PeopleSoft 4% Oracle 12% What software do you widely use to prepare VAT returns? Decentralised 16%

14 16 to 25 1% More than 25 10% Don t know 11% 1 10% How many FTE days does it take to prepare your VAT return? 6 to 15 20% 2 to 5 48% Don't know 6% Less than 1 day 7% It varies 17% How many IT systems are used to gather data for VAT accounting & reporting? More than 10 days 17% Up to 10 days 18% Up to 5 days 35%

15 Very high automation (e.g. use of tax data warehouse, automated analytical review of VAT-sensitive information) 0% To what extent is your organisation s VAT compliance automated? Limited (e.g. heavily reliant on Excel) 49% Don t know 2% Some automation (e.g. automated purchase or invoice processing systems, including VAT determination) 41% Not important Somewhat important 2% 10% Significant automation (e.g. highly customised ERP process and/or use of tax engine and/or specialist VAT return preparation tools) 8% Important 31% How important to you is the automation of VAT compliance in your organisation? Don t know 4% Critical 12% Very important 41%

16 Stakeholders & Governance

17 Who are your stakeholders? Tax Authorities Wider Tax Function Internal Audit Indirect Tax External Auditors Regulators Business Unit Leaders and Finance Staff

18 Satisfying your stakeholders In some respects centralised compliance makes stakeholder management easier but it does demand more formality. Document processes and controls for completing Indirect Tax returns Agree and publish guidelines for dealing with tax authorities in audits, assessments and disclosures Implement a process for identifying and reviewing high risk countries/registrations Document and data retention guidance Regular review of indirect tax affairs to quantify risk areas Reporting key performance metrics

19 Introducing the Operating Model Layers Shaping your Indirect Tax governance model Level 1 Strategic direction Compliance strategy based on needs of key stakeholders, clearly communicated goals, roles and responsibilities, governance standards Level 2 Key tax & reporting activities Defined compliance processes and controls for tax and reporting activities by business division and function Level 3 Supporting infrastructure Infrastructure which supports and monitors compliance controls all activities, creating visibility over tax compliance for Group Tax function

20 Components of Compliance

21 The components of centralising compliance Centralisation of compliance People Knowledge Processes Technology Local expertise

22 The right mix of people An multi-disciplinary team comprising: Tax technical specialists Data management resources IT and Excel skillsets Accounting knowledge Project & Process managers and owners 3 rd party providers where appropriate People People The right mix of talents to consolidate and test data, submit returns, adapt systems and handle relationships with wider business and local tax authorities Nationalities Skill sets

23 Knowledge is a key to success Practical problem solving experience Expertise Continuous professional training Regular updates of knowledge databases Strong Tax technical knowledge Knowledge Knowledge Combination of Supported by Periodical Newsletters Updated tax Information per country EMEA Tax matrix and overviews Innovative EMEA Tax tools Periodical output

24 Reliable processes Important to recognise what compliance encompasses Processes Processes Preparing the return is a single step in the cycle Centralising compliance will surface pain points that need to be addressed We re becoming more adept at segmenting and aligning steps across processes Styles of process improvement look different across businesses but key steps are often common

25 Technology trends VAT compliance technology market still evolving: The number of international solution providers is increasing: with an eye on making the most of an under exploited market. 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 Processes Technology Underpinning technology solutions are supporting more flexible approaches to delivery. Clients deciding how much Indirect Tax compliance they want to share with a service provider will replace the binary in house vs. outsource decision. The systems for managing the tax process, KPI data and document management are becoming standard in many Tax functions, but adoption and approach vary from group to group.

26 A case in point Processes Technology People Knowledge Processes Technology

27 Executing on a Strategy

28 Executing your strategy Consider VAT s position within the wider business Identify your key stakeholders and determine how to work with them Take stock of what technology solutions are already available in the GBS and across your tax groups: you may have more to play with than you expect Focus on complementing and improving current processes rather than disrupting them Don t overcomplicate things: it puts adoption of change at risk Technology is not a silver bullet. Sustainable improvement takes care and effort There s more than one route to best in class

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