Securing

tomorrow today Setting up the tax

function to embed

controls around people,

processes and systems

Wobke Hahlen – Deloitte Netherlands

Marvin de Ridder – Deloitte Netherlands

Background & trends

Tax transformation – theory

Tax transformation – practice

Critical success factors

Recap

Agenda

Background &

trends

Changing roles

Finance transformation Tax: the “rock stars” of the bottom line

Influencing events

Common challenges

• Ignoring the enhanced value tax can deliver

• Leaving potential profits from tax planning on the table

• Failing to take into account the tax implications of everyday business decisions

• Designing information systems without the ability to track tax-related details necessary for planning

and compliance

• Accessing data, implementing effective controls, and creating tax-aligned systems

• Developing the organisation’s ability to identify and to respond to changes in laws when enacted

• Communicating the tax vision to the CEO, Board of Directors, analyst community, and throughout the

enterprise

“CFOs, too, are coming

around to this way of thinking.

Tax is a very important but

often overlooked element of

Finance Management. Its

importance is twofold. First,

getting tax calculations right is

vital for finance execution.

Second, tax can be a

contributor to the bottom line.”

Source: Kennedy, Finance

Management Consulting Marketplace

2009-2012

Negative press

? Budget pressure

? Reduction

headcount Shared

Service Centre

Theory

The 4 enablers of the Tax Function

5

Capability maturity model Tax cycle – (extended) tax function

Stage 1 Stage 2 Stage 3 Stage 4

Ta

x O

rga

nis

atio

n

Processes not

defined and

inadequate

Independent tax

department

Processes informally and

inconsistently defined

Not integrated across the

organisation

Limited communication and

coordination between

business units

Processes defined and integrated

Errors not traceable to an owner

Relatively centralised

Strong coordination between business

units

Processes defined and

communicated

Integrated: assigned to owners

across the business

Centralised and cost effective

High synergy between different

business units

Ta

len

t & P

eo

ple

Data gathering

focused

Tax roles and

responsibilities are

not differentiated

Broad skills are recognised

Requires cross functional

training

Adequately trained

Resources are deployed appropriately

according to skills and business

needs

Continuously trained

Focused on data analysis

Proactively manages key business

decisions

Highly specialised and deployed

appropriately

Po

licy &

Pro

ce

ss

Not well developed

Informal

Ineffective

Defined for preparing

financial/tax information

Inconsistently executed

Integrated

Not completely automated

Integrated

Automated and accurate

Info

rma

tion

&

Syste

ms

Data architecture not

integrated

Little automation

Use common platforms

Reduced manual entry and

adjustments

Reconciliation and financial analysis

processes are executed quickly

Able to rely upon integrated and

automated information

Integrated systems

Customisable

Automated and accessible through

Finance/Tax portals

Elements to enable transformation

Tax Strategy

& Vision

Tax

Organisation

Finance/Tax

Systems

Tax Process

Practice How to create a

vision and roadmap

Tax Vision Tax 2020

Mission Vision

Defines the right to exist and the

identity of an organisation

The organisation observes the world of

today and the opportunities of

tomorrow and outlines the desired

state

Enablers

Means which can be used by

organisations to achieve their goals

Tax Strategy Concrete actions

Tax Type Current Situation 2013/2015 2020

Enabler Sub- enabler Improvement opportunities What do I need for my function End state

Systems &

Information

Data & Systems Architecture

Systems Implementation /

Integration

Application Management

Security & Control

Tax Organisation

Business partnering

Organisation Design &

Governance

Shared Services & Off-shoring

Outsourcing (advisory)

Talent & People

Competencies, Roles &

Responsibilities

Training & Development

Incentives, Retention &

Succession Planning

Recruitment

Policy & Process

Process Design & Tax Policies

Process Improvement &

Optimisation (e.g. Six Sigma,

Lean)

Accessibility & Awareness

Compliance & Attestation

Example: Tax Roadmap 2020 Standardisation

Topic 2013 2014 2015

Ambition

2020

E2E Manage Taxes

Process

• Cycle time filing & reporting

• Accurate compliance & reporting

• Process excellence

• Sustainable monitoring and tax control

• Integration and standardisation of

enabling landscape and system

architecture

Maintain tax master data • Clear guidelines for TP policy

implementation into master data

Maintain tax policies &

procedures

• Implement standardised processes

• Clearly defined roles & responsibilities

and back-up structure

• Shared, standardised information,

documentation, resources and policy &

procedures

Perform knowledge

management

• Sufficient, shared and sustainable tax

knowledge and awareness throughout

the global organisation

Perform tax

planning/strategy • Optimisation of sustainable tax planning

and global tax cash optimisation

Perform tax risk

management • Standardised tax risk management

process facilitated by automation

Monitor tax compliance • Insight in global tax compliance status

Manage tax provisions • Standardised and optimised UTP

recognition and determination

Perform tax reporting • Automated (improved) tax reporting

template for efficient consolidation and

tax reporting positions

Prepare returns (indirect) • Automated tax determination

Identification Roll-out Pilot Value realisation

Phase

T05 Design Integrated Landscape

T05 Implement Integrated Landscape

T02 VAT Analytics T04 Data analytics (improvement initiatives)

T01 TA Analytics T04 Data analytics

T03 T&C Analytics T04 Data analytics

T06 Tax Dashboard

T07 TP

RACI

T10 RACI

T11 Central Repository

T12 GSA

T13 Esc

T14

T15 Tax Learning

T16 Scenario Planning

T17 Tax Opt Study

T18 Tax Risk Control

Monitoring

DDT

T21 UTP

T22 Tax Pack

T23 Automate AP

T24 VAT add on

T08 Process

T09

P&P

T19

T20

Practice Starting with

standardisation

Tax transformation First steps

Roll-out

1. Remaining countries / entities / tax processes

2. Current state analysis

3. Fit-gap analysis

4. Implementation of Tax processes, RACI, Control Measures, P&P, Tax Dashboard and

Central Repository

Roll-out (based on project charters) remaining standardisation projects

2. Design RACI / Controls 4. Define Other (Sub)

Enablers 1. Design Standardised

Tax Processes

The level 4, 5 and 6 To-Be

standardised process design and

documentation for tax has been

delivered

Validation workshops

Tax strategy workshop

Design To-Be standardised RACI’s

and Controls for all tax processes on

level 4, 5 and 6

Draft To-Be Tax Policies &

Procedures

Tax Policies & Procedures will be

based on existing materials

Functional design req. repository for

shared, standardised processes,

information, resources and policy &

procedures

Functional design req. dashboard to

create clear overview of tax kpi’s

Desig

n

6. Review/Analysis Pilot Implementation 5. Tax processes, RACI, Control Measures and Policies &

Procedures

Pilot implementation:

1. Selection of countries / entities / tax processes

2. Current state analysis

3. Fit-gap analysis

4. Implementation of Tax processes, RACI, Control Measures and P&P

Pilot implementation review consisting of:

1. Evaluate of pilot implementation (1) start-up and design, (2) Implementation and (3)

Handover, Operations and User Perspective

2. Lessons learned per key issue, lessons and action (to be) taken

3. Transition to Roll-out Pil

ot

Imp

lem

en

tati

on

8. Remaining standardisation topics 7. Tax processes, RACI, Control Measures, Policies &

Procedures, Central Repository and Tax Dashboard

Ro

ll-o

ut

3. Design Policies &

Procedures

Tax transformation - step 1 Define tax processes

Centralised data Strategy & Planning

Direct tax Indirect tax Wage tax

Inquiries & Advice

Customs tax

Risk management & Compliance

Maintain tax

master data

Maintain tax

policies &

procedures

Account for

taxes (direct)

Address tax

inquiries

Provide tax

advice

Prepare

withholding

taxes (direct)

Prepare

returns (direct)

Calculate

deferred taxes

(direct)

Account for

taxes (indirect)

Prepare

returns

(indirect)

Account for

taxes (wage)

Prepare

returns (wage)

Prepare

returns

(customs)

Account for

taxes

(customs)

Manage tax

provisions

Perform tax

reporting

Perform tax

risk

management

Monitor tax

compliance

Monitor tax

planning/

strategy

Perform tax

planning/

strategy

Perform tax

knowledge

management

Create

execution

plans for tax

Develop global

tax strategy

Tax transformation - step 1 (cont’d) Design standardised tax processes

Level Level description Tax Process

(example)

APQC number

(example)

# of processes

in tax framework

1 Indication of main functional domain Manage financial

resources

8

2 The Process Group is a grouping of processes from a

functional perspective

Manage taxes 8.9 1

3 A Process is a collection of related activities designed to

produce a specific set of outputs .The outputs of a

process maybe aimed to a set of different customers

Process taxes 8.9.2 2

4 An Activity is essentially a collection of related multi tasks

within a process. The activity has a single specific output

for a particular customer

Account for direct taxes 8.9.2.5 23

5 A Multi Task is essentially a structural piece of an activity

and can be broken down to tasks. Multi Tasks are

themselves executed in some order within the activity

(e.g. decisions, repetition, parallelism)

Collect and validate

financial and supporting

data

8.9.2.5.2 117

6 A Task is an atomic and unique step within an activity

that cannot be broken down into more detailed elements.

Tasks are themselves executed in some order within the

activity (e.g. decisions, repetition, parallelism)

Analyse and validate

financial and supporting

data

8.9.2.5.2.3 ~351

RACI (Re)design RACI on process step level 5

Controls (Re)design Tax Controls

Process flow Level 4 8.9.2.2 Prepare direct tax returns

Step 1

Step 2

Tax Policies & Procedures

(Re)design tax policies & procedures

Topics (examples) • Document storage – duration, location, access

• Tax Compliance – Planning, Source data, Computation

• Risk & Opportunities

Process flow Level 4 8.9.2.2 Prepare direct tax returns

Step 3

Critical success

factors

Tax transformation Critical success factors

• The finance/tax and technology organisations must be “joined at the hip”

• Be clear about goals

• Don’t “boil the ocean”

• Visioning is completed at the beginning of the project

• Change management is critical

• It’s about the data

• Run the project like you want to run the function

Recap

Tax transformation Recap

• Design standardised (tax) processes - efficiency

• Design RACI and controls linked to process steps – control & accountability

• Design policies & procedures – enables execution

• Design tax dashboard & central repository – enabling insight and knowledge

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