Finance, CELA and Human Resource (HR). Tax and Trade ...

Steve covers Finance, CELA and Human Resource (HR). The Finance function includes: Purchasing, RE&F, Venture Integration, Corporate Finance, Finance Operations, Physical Security, Treasury, Investor Relations, Corporate Development and CELA’s Litigation, Government Affairs, Intellectual Property, Office of Legal Compliance, Corporate Operations, HR Legal Group, Business Legal Support and Citizenship & Public Affairs. Lastly, with the HR Function: Talent and organization, Compensation & Benefits, HR Strategy and Operations, and HR Global Operations.

Prior to joining Microsoft, Steve worked for Arthur Andersen, Protiviti, and Teledyne.

Angel is a Senior Risk Manager

overseeing Human Resources

(HR) in the Enterprise Risk

Organization. Historically,

Angel supported the financial

reporting pillar in the

Enterprise Risk Management

program. Prior to working in

the enterprise risk organization

Angel has held financial

analytical roles in the global

sales and marketing

organization as well as the

Cloud and Enterprise

organization.

Prior to joining Microsoft,

Angel worked for Arthur

Andersen in their New York

Office.

The corporate program areas that

Robert covers are Tax and Trade.

The Tax function includes: Direct Tax

Reporting, International Tax

(including Transfer Pricing), Tax

Planning & Controversies, Policy, Tax

Process Technology, Worldwide

Indirect Tax. The Trade function

includes: SAP-GTS (System), Export

Control Classification Number,

Importation, Harmonized Tariff

Schedules, Valuation, Denied Party

List Screening, and International

Commercial (INCO)Terms.

IIA Puget Sound Chapter Luncheon

Global Regulatory Transparency Initiatives:Organization for Economic Co-operation and Development (OECD)Base Erosion and Profit Shifting (BEPS)

IIA Puget Sound Chapter October Luncheon 2017

Microsoft Audit Group Charter

To be universally recognized as a driving force behind a culture of

governance, accountability and execution excellence that creates shareholder

value and enables Microsoft to be the world’s most trusted company. Vision:

Mission:We provide independent and objective audit, investigative, and advisory

services aimed at providing assurance to the Senior Leadership Team and the

Board of Directors that the company is appropriately identifying, prioritizing,

and mitigating its risk.


- Internal Audit

Program Manager

• organizational, process-level risk assessment

• annual audit plan development

• audit project scoping / identification of control objectives

• audit field work team preparedness

• stakeholder management

Project Manager / Project Lead

• fieldwork execution (management)

• workpaper excellence

• people management

• audit report writing

• quality assurance


SEC Public Disclosures

The Organization for

Economic Co-operation

and Development has also

recently launched a base

erosion and profit shifting

(“BEPS”) proposal that aims

to rationalize tax treatment

across jurisdictions. If the

BEPS proposal becomes the

subject of legislative action in

the format proposed, it could

have unintended taxation

consequences for collective

investment vehicles and the

Company’s tax position,

which could adversely affect

BlackRock’s financial

condition.

2014 has been a year of

significant change in the

international tax landscape,

as a result of the

Organisation for Economic

Co-operation and

Development’s (OECD)

project on Base Erosion and

Profit Shifting (‘BEPS’). Rio

Tinto agrees with the primary

aims of BEPS, which are to

prevent aggressive tax

avoidance and to update tax

rules on a consistent basis to

cater for modern, globalised

business structures. Rio Tinto

does not engage in

aggressive tax avoidance.

Additionally, longstanding

international tax norms that

determine each country’s

jurisdiction to tax cross-

border international trade are

evolving , such as the Base

Erosion and Profit Shifting

project (“BEPS") currently

being undertaken by the G8,

G20, and Organization for

Economic Cooperation and

Development ("OECD"). As

these and other tax laws and

related regulations change,

our financial results could be

materially impacted.

In July 2013 the OECD, which

represents a coalition of

member countries, issued an

action plan containing 15

comprehensive actions

intended to address tax base

erosion and jurisdictional

profit shifting (BEPS). Their

recommendations are aimed

at combating what they

believe is tax avoidance and

to attempt to harmonize the

application of transfer pricing

rules amongst member

states. Changes in tax laws

could affect the distribution

of our earnings, result in

double taxation and

adversely affect our results.

In 2013, the Organization for

Economic Co-operation and

Development (OECD), which

is comprised of member

countries that encompass many

of the jurisdictions where we

operate, issued an action plan

calling for a coordinated, multi-

jurisdictional approach to

address issues in existing tax

systems that the OECD believes

may lead to tax avoidance by

global companies, which the

OECD refers to as “base

erosion and profit shifting”

(BEPS). The OECD has not yet

finalized its recommendations

pursuant to the BEPS action

plan.

OECD BEPS Specific Disclosures


http://us.pg.com/

To align tax reporting standards globally and eliminate unfair tax practices.

15 actions to address concerns about the perceived international tax avoidance techniques of multinational corporations.

More than 100 countries have agreed to implement BEPS inspired compliance requirements.


What is BEPS?

As Defined by the Organization for Economic Co-

operation and Development (OECD)

The method by which companies

exploit gaps and mismatches in tax

laws to artificially shift profits from

high to low tax jurisdictions where

there is little or no economic activity.

The shrinking or slowed growth of

economic activity that is taxable

under effective application of

statutory law.

Base Erosion and Profit Shifting

BEPS RECOMMENDATIONS

Address the tax

challenges of the digital

economy

Neutralize the effects of

hybrid mismatch

arrangements

Design effective

controlled foreign

company rules

Limit base erosion

involving interest

deductions and other

financial payments

Counter harmful tax

practices more effectively,

taking into account

transparency and substance

Action 1 Action 2 Action 3 Action 4 Action 5

15 Action Items

Prevent the granting of

treaty benefits in

inappropriate

circumstances

Prevent the artificial

avoidance of permanent

establishment status

Align transfer pricing

outcomes with value

creation

Measure and monitor

BEPS

Follow mandatory disclosure

rules

Action 6 Action 7 Actions 8 – 10 Action 11 Action 12

Standardize transfer

pricing documentation

and country-by-country

reporting

Make dispute resolution

mechanisms more

effective

Develop a multilateral

instrument to modify

bilateral tax treaties

Action 13 Action 14 Action 15



Provide information about the

jurisdictional allocation of profits,

revenues, employees, and assets.

Required Information:

- Company Revenue

- Stated Capital

- Profit Before Income Taxes

- Accumulated Earnings

- Income Taxes Paid

- Number of Employees

- Income Tax Accrued

- Tangible Assets

Provide corporate-level information

about the MNC’s business, transfer

pricing policies, and agreements

with tax authorities.


- Legal ownership structure chart

(including geographies)

- Description of businesses,

including profit drivers and supply

chain information

- Intangibles such as company

strategy

- Financial information and activity

Provide legal entity-level

information about the MNC’s local

business, including related party

payments and receipts for products,

services, royalties, and interest

(among others)


- Local management information

and organization chart

- Intragroup payments and receipts

for products, services, and royalties

- Financial information

Organizational Impact of BEPS• Increase in inquiries and audit activity because tax and trade (e.g. customs) authorities will have access to

information that was previously unavailable

• Change or adjustment to location of business activities, inventories, and assets in order to reduce taxes

• Change in sales structure in order to create a fair tax structure

• Conversion of commissionaire to buy/sell low risk distributor

• Changing payments to different legal entities for royalty and license fees

• Changing payments to different legal entities for developmental services such as research and

development and procurement services

• Increase in reporting requirements due to the new country-by-country (CbC), master file, and local file

requirements



• Increase the amount of tax information

companies must share with governments

• Enable governments to share tax information

with each other (and potentially with the public

in some cases)

• Eliminate a large number of tax “loopholes” that

companies take advantage of as a part of their

tax planning strategy

• Increase the compliance burden on tax

departments and the broader finance team

• Enact the same tax laws in every country

• Increase statutory corporate tax rates

• Require a radical restructuring of the corporate

functions (in most cases)

—Does the organization understand its tax position, both in its home jurisdiction and in other countries in which it operates? Is the board and management comfortable with where the organization has positioned its tax practices?

WSJ Article October 2017

The Board’s Role in Creating a Sustainable BEPS Plan

—In light of BEPS developments, should

the reporting methodology employed by

management in informing the board

about the organization’s tax practices

and relevant tax developments be

updated?

—What changes to the organization’s tax policy and business model should the board consider to be sure that the organization is aligned with BEPS initiatives and other new tax rules enacted in the jurisdictions in which the organization operates?

—How will BEPS and other new tax

developments impact the organization’s

share price? Is this expected and in line

with impact on comparable

organizations?

—Has the organization examined its legacy and current tax posture in light of the way it may be

perceived by stakeholders? Is there a risk that the tax posture may be misunderstood and will have a

negative impact on the organization’s reputation? If so, is the organization prepared to respond? Has

the board and management considered the potential financial impact of such reputational challenges.

The following are questions boards may want to consider with

regard to implementing BEPS recommendations.

Managing tax risk for

companies operating in a

continuously evolving global

tax environment extends well

beyond the actual outlay of

tax dollars.

US companies are not only

facing increasing reputational

and operational risk as they

adapt to increased

transparency and enhanced

international co-operation

between tax administrations,

but also legislative risk both

globally from the effects of

the OECD BEPS project and

domestically as the Trump

Administration and the

Republican Congress face

increased pressure to deliver

on their stated legislative

priorities.

• Identify the key people that need to be interviewed (head of tax; finance director; external

audit; tax advisers; HR and so on) and what their roles are in relation to tax;

• Gain clarity about which people are responsible for particular tax risks and what controls

they have to ensure that best practice and regulatory compliance are being followed.

• Understand clearly the ownership of the "tax universe" and the role of the tax team;

• Establish if there is a tax strategy: if there is one, what are the details, and who is in

charge?

• Review the organization’s cross collaboration cadence.

• Develop a tax-related internal audit plan that features the highest priority taxes and

processes, business units and jurisdictions;

• Plan may cover processes in tax function, finance, accounts payable, HR, payroll, business

units, third party providers, IT;

• Link the plan to the skills of the delivery team.

Finance, CELA and Human Resource (HR). Tax and Trade ...

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