thriving in diversity and change · data sharing tax revenues ... tax operating model framework...

Thriving in Diversity and Change

2015 KPMG Asia Pacific

Tax Summit

The Ritz-Carlton, Millenia Singapore

26-29 January 2015

The Evolution of Tax Operating Models & Tax Risk Management

Introduction

3© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services.

No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Panellists

Julie HughffGlobal Head of Tax Management Consulting

‒ KPMG

Andrew MillsSecond Commissioner, Law Design & Practice Group

‒ Australian Tax Office

Chris NguyenRegional Tax Planning Co-ordinator

‒ Chevron China

Tracy ZhangTax Partner, Tax Management Consulting

‒ KPMG in China

John SalvarisTax Partner, Tax Management Consulting

‒ KPMG in Australia

Panel: The Evolution of Tax Operating Models and Tax Risk Management



Challenges - External and Internal

Governance

Regulation

Transparency

Data sharing

Tax revenues

Cost reduction

Finance change

Technology

Outsourcing

Off-shoring

Globalization

Controversy

Tax

Functions

Tax

Authorities

Tax

Advisors



Tax Function and Authority Evolution

TAX FUNCTION: The focus of the tax function has evolved over time as its responsibilities have increased and it has been expected to deliver more with less.

■ Ensuring accuracy and timeliness of financial reporting and compliance

■ Managing tax risk and tax authority audits

■ Controlling costs –shared services, outsourcing, etc.

■ Increasing efficiency – ERP implementations, tax technology, etc.

■ Delivering cash tax savings or deferral

■ ETR optimisation

■ Managing information for country by country reporting, CRDIV, Transparency, etc.

■ Managing reputation with a focus on tax in the media

Value / What Risk / How Cost Transparency

10-15 years ago 5-10 years ago Today – 5 years ago Today

Data and

Automation

Beyond

■ Embed tax into ERP systems

■ From downstream outputs to upstream data

■ Automation of compliance activities

■ Real time data access vs. returns



Tax Function and Authority Evolution

TAX FUNCTION: The focus of the tax function has evolved over time as its responsibilities have increased and it has been expected to deliver more with less.

TAX AUTHORITIES: The focus of the tax authorities has

evolved over time

■ Ensuring accuracy and timeliness of financial reporting and compliance

■ Managing tax risk and tax authority audits

■ Controlling costs –shared services, outsourcing, etc.

■ Increasing efficiency – ERP implementations, tax technology, etc.

■ Delivering cash tax savings or deferral

■ ETR optimisation

■ Managing information for country by country reporting, CRDIV, Transparency, etc.

■ Managing reputation with a focus on tax in the media

■ Systems testing (of the “how”)

■ Tax in the Boardroom

■ Helping to comply

■ FCA/ACA

■ RDF rolled out

■ SBR/data matching

■ Real time PCR/RTP

compliance activity

■ ECAP pilot

■ Substantive testing (of the “what”)

■ Audits 2-3 years after transactions (compliance cycle)

■ BEPS and top down global view of MNCs

■ Automatic Exchange of Information

■ FTA, SGATAR, JITSIC expanded

Value / What Risk / How Cost Transparency

10-15 years ago 5-10 years ago Today – 5 years ago Today

Data and

Automation

Beyond

■ Embed tax into ERP systems


■ Automation of compliance activities


■ Data analytics and testing


■ Automation of basic audit activities




How are Tax Functions responding?

“69% of companies

had undertaken risk

management and/or

controls

improvements”

“49% of tax

functions were

engaged in or

considering

organisational

structure reviews”

“Over 1/3 of companies

had undertaken either

ERP or shared service

centre implementations

or reviews, but in only

30% of cases was the

tax function integrally

involved”

“62% of tax functions

were engaged in or

considering overall

tax strategy and

operational reviews”

Ensuring clarity of

accountabilities and

responsibilities

Driving

standardization to

automate and

control

Improving business

partnering and

connectivity



Tax Operating Model Framework

BUSINESS CASE

HOW WILL WE BENEFIT?

The economic model of value, costs and capacity

VISION

WHAT DOES SUCCESS LOOK LIKE?

The tax function’s defined high level strategic goals and the target

service it aims to deliver to internal and external customers

TAX POLICY AND TAX STRATEGIES

HOW WILL WE ACHIEVE IT?

The tax function’s defined policy and strategies to deliver

the vision, developed into design principles

TAX OPERATING MODEL

HOW WILL WE OPERATE?

The high level conceptual view of the

components delivering the strategy

HOW WILL WE DELIVER?

The detailed design of the components

underpinning the architecture

VISION

TAX POLICY

AND TAX

STRATEGIES

TAX OPERATING

MODEL

BUSINESS CASE

Organisational

Model

Process and

Responsibility

Systems and

Technology

Data and

Information

People and

Capability

Governance

and Risk

Performance

Management



Components of the Tax Operating ModelC

OM

PO

NE

NT

DE

FIN

IT

IO

NS

Organizational

Model

Process and

Responsibility

Systems and

Technology

Data and

Information

People and

Capability

Governance

and Risk

Performance

Management

■ Governance required to

direct the tax function

■ Enabling culture

(behaviours/values)

required to deliver

■ Key tax risks, identified

mitigating factors and tax

control framework

■ Influencing stakeholders

■ Tax organisation structure,

including headcount sizing,

roles, reporting lines, spans

and layers

■ End to end sourcing and

location strategy, including

tax activity delivery model,

location of assets and

sourcing model

■ Required employee profile

to deliver tax operating

model:

– Skills, capabilities,

development needs and

training

– Strategy to retain and

engage key talent

– Succession planning

■ Key processes required to

deliver the tax operating

model:

– Ownership and

governance

– Operational responsibility

– Policies

– Efficiency of practice, cost

and service level drivers

■ Governance of data and

information ownership and

quality

■ Effectiveness and

efficiency of delivery of

data and information to the

business

■ Use of information to

support decision making

■ Core financial and other

systems that provide the

required data and

information to deliver tax

processes

■ Dedicated tax technology

that enables tax processes

■ Infrastructure architecture

and support model

■ Key

performance

metrics used to

measure, track

and reward

performance of

the tax function

(financial,

operational and

people metrics)



Components of the Tax Operating Model

Organizational

Model

Process and

Responsibility

Systems and

Technology

Data and

Information

People and

Capability

Governance

and Risk

Performance

Management



Journey to the Tax Function of the Future

Establish the

as-is position

Implement

effective

technology

solutions

Embed efficient

processesDeploy the

right people

with the right

skillsDesign the

organisational

model

Tax function of

the futureManage risk

and create

appropriate

KPIs

Develop the tax

vision and

policy

Organizational

Model

Process and

Responsibility

Systems and

Technology

Data and

Information

People and

Capability

Governance

and Risk

Performance

Management


Audience Q&A


Key Messages

Thank you

Presentation by

Name Surname

© 2015 KPMG International Cooperative ("KPMG International"), a Swiss

entity. Member firms of the KPMG network of independent firms are affiliated

with KPMG International. KPMG International provides no client services. No

member firm has any authority to obligate or bind KPMG International or any

other member firm vis-à-vis third parties, nor does KPMG International have

any such authority to obligate or bind any member firm. All rights reserved.

The information contained herein is of a general nature and is not intended to

address the circumstances of any particular individual or entity. Although we

endeavor to provide accurate and timely information, there can be no

guarantee that such information is accurate as of the date it is received or that

it will continue to be accurate in the future. No one should act on such

information without appropriate professional advice after a thorough

examination of the particular situation.

thriving in diversity and change · data sharing tax revenues ... tax operating model framework...

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