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TRANSCRIPT
AT A GLANCE
Tax Challenges• Streamliningand
integratingtransactiontaxprocesseswithitsfinanceapplications
• Automatingprocesseswithmultipledatasources
• Maintainingdataformorethan1,500taxcodes
• Managingbusinessprocessestosuitbothinternationalandspecificlocalneeds
Results• Abletoapplynewrate
adjustmentsrapidly• Reducedthenumberoftax
filingsandadjustmentstofilings
The CustomerLenovowasformedwhentheChina-basedLenovoGroupacquiredIBM’spersonalcomputingdivisionin2005,becomingapersonalcomputergiantwithtaxoperationsin65countries.Lenovoisnowagloballeaderindeveloping,manufacturing,andmarketinghigh-qualitycomputerproductsandservices.
LENOVO, INC.Integrating Transaction Tax Solutions Globally for the New WorldDespitethechallengesofmaintainingcompliancewithcross-bordertaxrequirementsanddeterminingsalesandusetax,goodsandservicestaxes(GST),andvalue-addedtaxes(VAT),it’sstillpossibletotakecontroloveryourcompany’staxstrategies.Lenovo,oneoftheworld’slargestmanufacturersofpersonalcomputers,overcamethelogisticandgeographicchallengesofconsolidatingcorporatetaxprocessestoachieveglobalalignmentofitstaxstrategieswithbusinessprocesses.
Ofcourse,implementingaglobal-taxsolutionwhenoperationaldowntimeisn’tanoptiontakesdiligentplanningandaphasedapproachtoexecuteglobaldeployments.ThiscasestudyhighlightstheintegrationofLenovo’scentralizedglobal-taxsolutionwithitsbusinesssystems,andexplainshowoneofthemostinnovativemanufacturersofpersonalcomputingtechnologyisnowabletotransformitsglobalfinanceoperationsbyleveragingenterprisetransaction-taxmanagementsolutions.
LenovoistransformingitsfinanceoperationsbyusingONESOURCEIndirectTax,aswellaslimitingthetimeitsITdepartmentneedstobeinvolvedinprogrammingwhenchangesintaxrulesandratesoccur.
A GLOBAL BUSINESS WITH GLOBAL CHALLENGESWhenLenovoacquiredIBM’spersonalcomputingdivisionin2005,itbecameatrueglobalbusiness,withstrongconsumerandemergingmarketleadershipandanefficientsupplychain.Today,thecompany’ssalesorderandmanufacturingprocessesaredistributedaroundtheworld,withprincipaloperationsinMorrisville,NorthCarolina,Beijing,Paris,andSingapore,andmanufacturingfacilitiesinChina,India,Poland,andMexico.Lenovo’snewglobalpresencemeansnewopportunitiesforgrowth,moreagilemanufacturing,andmorecomplextaxes.Thechallengewastostreamlineandintegratethecompany’stransactiontaxprocesseswithitsfinanceapplicationsonaglobalbasis.
INTEGRATING ONESOURCE INDIRECT TAX WITH SAPLenovousesSAPasitsenterpriseresourceplanning(ERP)system,butrequiredasolutiontoautomatethedetermination,calculation,andrecordingofU.S.salesandusetaxandinternationalVAT.AlthoughSAPcancalculatestandardtaxrates,therewereotherglobaltaxcompliancechallenges,suchasconstantlychangingtaxratesandrulesacrossmultiplecountries.“WewerelookingtoextendthetaxdeterminationpowerofSAP,”saysDennisCulin,directorofbusinesstransformationatLenovo.“Wewantedtouseasimple
ONESOURCE® CaseStudy
“We wanted a single set of rules that the tax department could control — not IT, and not the end user — to make sure that our tax liability was accurate.” DENNIS CULINDirector of Business Transformation
inMexico,Poland,andBrazil.“Thenwe’llcontinueonournextstepsanddeployintheAmericasandEMEA,”saysCulin.“Basically,we’removinga$16billioncompanyontoitsownbusinesssystems,andwe’vehadtodothatwithlimiteddowntimetomakesurethatourcustomerneedswerebeingmetwhileweweredeployingourstrategicsoftware.”
NEW THINKING FOR A NEW WORLDLenovo’sslogan,“newworld,newthinking,”isaperfectwaytosumupthecompany’sapproachtotransactiontaxes,saysCulin.“We’retryingourbesttobringnewthinkingtothisnewdigitalworld,sowe’reworkingwithpartnerslikeSabrixtocollaborategloballyandtodelivervaluebycombiningthestrengthsofmultipleculturesandembracingemergingmarkets,”heconcludes.
ONESOURCE CASE STUDY
“Now that we’ve completed what we call our global solution design, we’ve configured Sabrix so that our transaction tax processes areextremely well defined.” DENNIS CULINDirector of Business Transformation
system,asinglesetofrulesthatthetaxdepartmentcouldcontrol—notITandnottheenduser—tomakesurethatourtaxliabilitywasaccurate.”
LenovoselectedONESOURCEIndirectTax,whichinterfaceswithSAPtocentralizetaxdeterminationandprovideasinglecompliancedatabaseforU.S.andinternationaltransactiontaxes.
“Weneedtomakesureourtaxabilityiscalculatedcorrectlythefirsttime,withouthavingtorecalculateorfixthingsonthebackend,”saysCulin.“Wealsowantedtoavoidoratleastlimithumaninterventionwiththetaxdetermination.Theusershouldnothavetomakeadeterminationontaxabilitybygoingthroughandpickingataxcode.Weneededasystemthatwouldmakethatdeterminationbasedonpredefinedrulesestablishedbyourtaxdepartment.”
Lenovo’stransactionalandmasterdataisalwaysinterfacedfromSAPtoONESOURCEIndirectTax,whichmeansthattaxdecisionsaremadebyONESOURCEIndirectTax,butthemasterdataandrelatedmappingtablesremainwithintheERPsystem.“WewantedallthesourcedatatobeinSAP,andthentransmittedovertoSabrix*,”explainsCulin.“Thisway,thecalculationscanbemade,storedintheauditdatabase,andthenthelogisticsrecordsaresentbacktoSAPandstoredthere.”
TheONESOURCEIndirectTaxintegrationforSAPinterfacesupportstaxcallsfromsalesanddistribution(SD),materialsmanagement(MM),andfinancial(FI)modulesofSAP.“WeusegenericinputandoutputtaxcodesthatarenotratespecifictocallSabrix,”saysCulin.“Weusetwotaxcodes—oneforpurchasesandoneforsales—andeverythingtransfersoverintoSabrix,sothatwecanmakesurethatthedecisionisalwaysmadethere.”
ONESOURCEIndirectTaxholdsallnecessarytaxratesandexemptionsandautomaticallydeterminesaddressjurisdictionforvendors,customers,costcenters,andplants.“WealsolinktoSAPCRMtodooursalesquotesandinvoices,”saysCulin.
“Wheneverwetakeaquoteormakeanorder,SAPCRMwillmakeataxcalltoSabrixtomakesurewe’veputthecorrectvalueonthequoteororder.Inmostofthecountrieswherewedobusiness,we’realsoimplementingcompleteecommercecapabilities,andwe’redoingsalesquotes,orders,andinvoicesinthatenvironmentaswell.Andagain,thecallisbeingmadetoSabrixanytimeatransactionischangedorsaved.”
Inadditiontotrackinginputandoutputtaxes,importandexport,andrevenuecharges,LenovoisusingcustomcapabilitieswithinONESOURCEIndirectTaxtoautomaticallydeterminetransactionalenvironmentalhandlingfeesrequiredbycustomsauthorities,savingadditionaladministrativetime.
ThefinanciallytransformedLenovoisnowusingONESOURCEIndirectTaxatitsoperationsinChina,Singapore,India,andCanada,andisintheprocessofgoinglivethroughouttheAsia/Pacificregion.
“ThemajorityofactivityinourtaxworkiscontrolledbyourtaxdepartmentwithinSabrix—it’snotcontrolledortouchedbySAP,”Culinreiterates.Lenovo’soperationalheadquartersinSingaporeservedastheprovinggroundfortheONESOURCEIndirectTaxsolution.“Nowthatwe’vecompletedwhatwecallourglobalsolutiondesign,we’veconfiguredSabrixsothatourtransactiontaxprocessesareextremelywelldefined.Goingforward,deployingthesolutiontotherestofthecountriesinwhichwedobusinesswillbemucheasier,andwe’llbeabletotakemoreofa‘cookie-cutter’approach—onlylocalizingasrequired.”
LenovowillsoonrolloutONESOURCEIndirectTaxtoitsmanufacturingfacilities
*SabrixwasacquiredbyThomsonReutersinDecember2009.
© 2013 Thomson Reuters/ONESOURCE. All Rights Reserved.
ONESOURCE_Lenovo_CS_01-2013_100
ABOUT THOMSON REUTERS ONESOURCE INDIRECT TAX
ONESOURCEIndirectTaxispartoftheTax&AccountingbusinessofThomsonReuterswithsolutionsdesignedtohelpcompanieseffectivelyandefficientlycomplywiththegrowingcomplexityofindirecttaxrequirementsaroundtheworld,includingsalesandusetax,VAT,GST,andindustry-andcountry-specifictaxes.
TheONESOURCEIndirectTaxsolutionwasformedfromthreerenownedbrands:Sabrix,AbacusVATCompliance,andONESOURCESales&UseTax.ONESOURCEIndirectTaxoffersend-to-endglobalsoftwaresolutionsandconsultingservicestostreamlinetaxplanning,indirecttaxdetermination,calculationandreportingprocesses,andlocaltaxcomplianceforsmall-tomedium-sizedbusinessesandglobal2000multinationalcorporations.
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