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Streamlining Global TaxAutomation
ZyTax is an organization committed to excellence inautomation of Tax determination and compliance.
Headquarters – Houston, Texas
Employee owned with strategic financial partners.
13 year old company with 1500+ InstalledCustomers.
Wholly owned subsidiary of FuelQuest, a leadingedge technology and business partner of choice forcompanies that buy, sell and distribute petroleumproducts.
OverviewOverview
ZyTax is quite simply the industry and government agency standardfor automating the determination, compliance, and filing of indirecttaxes with proven expertise in Excise Motor Fuels taxation.
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Tax Process Life CycleTax Process Life Cycle
SourceTransactions
AccountingProcesses
EnterpriseSystems
AccountingData
TaxData
TaxProcesses
TaxDeliverables
Tax relevant data is requiredto process transactions
Accounting data entity andaccount determination aretax sensitive (i.e., legalentity)
Accounting processes aredesigned to make taxdecisions “transparent” tothe user
Tax relevant processes(for in-scope taxes,business units andlocations) documented
Tax attributes identifiedin each sourcetransaction process
Tax data elementsidentified andnormalized acrosstransaction processes
Tax decision-making isautomated in thetransaction processthrough businessrules, bolt-ons, or both
Accounting masterdata structures includetax classification
Tax attributes are captured& stored in transactiontables
Tax reports are included instandard package or arecustom developed
Audit trail from transactiondetail to tax decision-making is maintained
Tax data is interfaced tokey tax compliance andplanning systems (internalor external)
Accounting data is archivedin compliance with taxrecord retentionrequirements
Cost of Transaction Tax ManagementCost of Transaction Tax Management
Cross border goodsand services
Promotion schemesTax recoveriesCash flow planningTax registrationsDocumentation
In m
illio
ns
0.65
1.56
0.190.230.30
0.55
$0
$2
$4 Processing Cost
Cost of Errors - Sales
Cost of Errors - Procurement
Penalties and Interest
Cash Management Cost
System Maintenance Costs
For every $1 billion in revenues, 3.5 million may be spent in transaction taxmanagement…
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Tax Optimization and Risk ManagementTax Optimization and Risk Management
Complexity -> Cost -> ConfrontationIn a recent survey, over 300 EU Tax managers were asked what their primary
concern was in relation to indirect tax management in the EU;
Compliance disputes impact - Cost to Company, Reputation Cost, Audit Cost, Personal Liability,100%+(Fines/Fees/Penalties), & Cash Flows.
Compliance regulations are in a constant state of change.
Regulations vary between countries and within countries.
The ability to reclaim tax returns is increasingly difficult. (IRAP/HIPA)
VAT Fraud exposure ”carousel” – approx. 10 Billion Euro annually.
Scarcity of qualified resources becoming more difficult.
Excise fuels tax liability is exponentially greater than standard VAT liability.
The ability to address complexity becomes a strategic advantage
Complexity 33%Cost 13%Confrontation 5%All of the Above 49%
Direct TaxDirect Tax
Legal entity reporting Process for legal entity information
capture Definition and use of the ERP reporting
structure
Data sensitization and the identification of taxspecific items.
Use of ERP master data to provide for taxspecific reporting attributes.
Optimization of the chart of accounts
Capture and management of book to taxadjustments
Non ERP Solutions (Spreadsheets, taxspecific applications
Provisions versus returns process Provisions – Material Items Tax Return – No level of materiality
Direct taxes are levied by tax authorities on thetaxable profits of an organization
To be compliant , the organization must be ableto demonstrate that it is operates with in the taxcode of the jurisdictions in which it serves / hasa presence..
Organizations can spend vast resources onimplementing efficient R2PR, OTC, P2Pprocesses but not necessary optimal for tax.
Tax functions (and the shadow tax resources)spend vast time manually mining accountingdata to determine appropriate tax treatment.
Manual process typically evident in thecompliance process.
Context Challenges & Complexities
Tax requirements in ERP implementations are often of low priority for an ERPimplementation, but the foundation of the business model is typically based on taxefficient operations…
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Indirect taxIndirect tax
Transactional Complexity Multinational / Cross Border Inco Terms Triangulation Acquisition & Use Taxes
Company Complexity International Trading Zones Registrations Establishments
Merger & Acquisitions Consolidated Reporting
Products & Services Products Services Special Combinations
Changing RegulationsExceptions/ Exemptions
Transaction taxes are indirect taxes levied by taxauthorities on the sale or purchase of goods andservices.
Found in different flavours around the world US: Sales tax and Use tax (avg. 6%) Asia/Pacific: Sales tax India; Goods &
Services Tax Australia; China; and manyothers
Latin America: IVA, Percepcion, Surtax(Argentina); state taxes in Brazil; andmany others
Europe: Value-Added Taxes (VAT – avg.18%) with many country specificvariations
Emergence of bolt-on tax determinationapplications (including non North Americasolutions)
Context Challenges & Complexities
Global Common Tax DesignGlobal Common Tax Design
Tax Process Management
Post &
reconcile tax
Manage tax (Compliance/
Audit/ Risk)
Analyse taxsensitive data
Extract taxsensitive data
Generate taxsensitive data
Maintain taxframework
Post tax back tothe ERP system
and reconcilebalances
Calculate andreport
Analyse data fortax calculationsand reporting
Store and accessdata for tax
analysis
Ensure businessprocesses capture
tax data
Maintain masterdata, mappingrules, decisionmatrices etc
Tax data is captured and held in the Enterprise solution Transactions are evaluated for Corporate Taxes months and years after the event. Therefore:
The lower the degreeto which Enterprisesolution meets taxrequirements
The greater theeffort of the taxorganization todetermine tax data atadequate levels ofgranularity andquality
The lower the valueof tax deductionsand adjustments dueto flat rateagreements with thetax authority.
The greater theeffective tax rate andhence the taxburden to theorganization
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Tax Management SpectrumTax Management Spectrum
Tax processes useautomated datagathering toincrease efficiencyand reduce cycletime
Communication inthe tax organizationfocuses on reducingduplication of effort
Current data eithercaptured orarchived in existingfixed structure
Tax-relatedbusiness processesperformedseparately by usingor manipulatingexisting accountingdata
Significant time andeffort spentgathering data forcompliance andaudit
Data maintained atoperating units
Users focus ondata quality andreuse
Formal programsto improveperformance areinitiated
Data captured in aconsistent, taxsensitive structurewith centralizedaccess
Tax complianceand auditprocesses areintegrated
Tax activity shiftsfrom historical tocurrent focus
Live audit trail fromtax return to sourcedocuments
Organization hasaccess to completeset of tax knowledge(e.g research, auditready support)
Formal processes toenhance knowledgesharing andcommunication
The tax organizationis repositioned tomaximize valuecreation
Every tax department falls somewhere on the Tactical-to-Strategic Spectrum
TACTICAL TACTICAL STRATEGICSTRATEGIC
STATIC REACTIVE PROACTIVE PROGRESSIVE PIONEERING
Tax Management OptimizationTax Management Optimization
• Increaseoperationalefficiency
• Reduce Risk
• Optimize cashflow
• Decreaseliabilities
Strategy• Optimize Effective
Tax Rate
• Improve Direct TaxData Quality andComplianceEfficiency
• Streamline andAutomate InterimReporting
• Improve AuditEffectiveness
• Reduce TransactionError Rate
• Improve TaxForecasting andPlanning
Performance
Process
Technology
Data
Requirements
Optimized Tax Management will facilitate an organizations ability to collaborate andbecome a strategic member of the Business Process Management Team, using process,technology and people.
People
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Streamlined Global Tax ManagementStreamlined Global Tax Management
Data sources PlatformW
eb portalPortal
Asset
Purchases
Sales
GL
Extracttransformand load
Datawarehouse
Documentrepository
Business processautomation
Reporting & Analysis
Calculation engine
Content Management
Document Management
Brow
ser
Other
Transactional Sourcesystem
s
Direct tax software
Streamlined Automation
Indirect tax software
Direct tax:
• Transactional data sensitisation
• Tax Data Warehouse
• Reporting
• Controls
Indirect tax:
• Global generic process
• Indirect tax management
• Reporting
• Controls