Indirect Tax: Disruption in the Global Indirect Tax Environment€¦ · — Managing tax risk and...

Exploring new directions in the world of tax2018 Financial Services Tax ConferenceJuly 19, 2018

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Disruption in the Global Indirect Tax Environment

2© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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The following information is not intended to be “written advice concerning one or more Federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.

Notices

AgendaU.S. Indirect Tax: Changing Landscape

Nexus: Wayfair Decision –Navigating a world without Quill

What’s Next? Key Considerations and Next Steps

Other Legislative Updates

VAT Considerations

0102030405

Questions?06


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Today’s presenters Name Title Firm | Company

Name Email | Telephone

Dennis Prestia Principal, State and Local Tax KPMG LLP [email protected]

Diane Dorr Managing Director, State and Local Tax KPMG LLP [email protected]

Tony Ng Managing Director, State and Local Tax KPMG LLP [email protected]

William Luna IIIManaging Director, Head of State and Local Tax

Jefferies LLC [email protected]

U.S. Indirect Tax: changing landscape


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The changing landscape

— Compliance within established deadlines

— Reactive to business needs or special projects

— A focus on accuracy and timeliness of financial reporting and compliance

— Managing tax risk and tax authority audits

— Controlling costs –shared services, outsourcing, etc.

— Increasing efficiency –Third party software, tax technology, etc.

— Managing informationto create value

— Automating tasks that do not require humans

— Data driven decision making

Compliance

Manage risk

Reduce cost

Value creation

15+ years ago 10-15 years ago 10 years ago Today

The tax function has evolved: “deliver more with less”


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Sales and use tax versus VAT

Sales and Use Tax VATSingle stage Multi stage (exemption certificates rare)Not creditable CreditableGenerally applies to goods and selected services Goods and servicesMonthly/Quarterly returns Monthly/Quarterly/half year returnsJurisdiction specific rules Jurisdiction specific rulesUse tax Reverse charge

Nexus: The Wayfair decision –navigating a world without Quill


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Nexus building blocks

Divisional / Attributional Nexus

Independent Contractors/Agents

Employees/Actual Place of Business

Mail Order/Internet/

Marketplace

Economic Nexus?


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On June 21, 2018, the Court ruled in a 5-4 decision in favor of South Dakota— The Court concluded that the physical presence rule set forth in Quill is overruled as it is “unsound and incorrect”— The physical presence rule “has been the target of criticism over many years from many quarters”

- “Quill is flawed on its own terms. First, the physical presence rule is not a necessary interpretation of the requirement that a state tax must be applied to an activity with a substantial nexus with the taxing state. Second, Quill creates rather than resolves market distortions. Third, Quill imposes the sort of arbitrary, formalistic distinction that the Court’s modern Commerce Clause precedents disavow”

— While, multistate business may be faced with significant compliance costs, the Court suggested that other aspects of constitutional analysis, can “better and more accurately address any potential burdens on interstate commerce”

South Dakota v. Wayfair


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The Court’s analysis— Purpose of the Commerce Clause is not to relieve those engaged in multistate businesses from their

“just share” of state tax burdens— In addition, Quill does not work in today’s economy, and it creates unjust results for both states

and businesses— The physical presence rule puts businesses with a physical presence in a state at a competitive

disadvantage to remote sellers- Also, produces an incentive to avoid physical presence- “Rejecting the physical presence rule is necessary to ensure that artificial competitive advantages are not

created by this Court’s precedents”— Other Commerce Clause precedents will protect against any undue burden on interstate commerce

- South Dakota’s law included several features that appear designed to prevent discrimination or undue burdens upon interstate commerce

South Dakota v. Wayfair


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South Dakota v. WayfairThe Court’s analysis— Instead of Quill’s physical presence rule, the appropriate test is whether the taxpayer “avails itself of the

substantial privilege of carrying on business” in a jurisdiction— The taxpayers had substantial nexus with South Dakota

- The taxpayers at issue, large retailers with extensive virtual presence, clearly availed themselves of the substantial privilege of carrying on business in South Dakota

— The case was remanded to South Dakota to determine whether South Dakota’s law was otherwise consistent with the Commerce Clause


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The physical presence rule has been overturned, but it is not clear how the Court’s holding will be applied in every other state— It’s important to keep in mind that the Court did not hold that South Dakota’s law would be permissible under

every circumstance in every state- The Court held that the taxpayers at issue had the requisite virtual and economic contacts with South Dakota

to meet the “substantial nexus” requirement— There might be a different result for different sellers in other states

— Also, under the Court’s rationale, the laws, as applied to the sellers, cannot discriminate or place undue burdens upon interstate commerce- The South Dakota statute, in the Court’s view, appeared to do neither

— The South Dakota law included a safe harbor for those sellers who transacted only limited business in South Dakota; ensured that no obligation to remit the sales tax may be applied retroactively; and, South Dakota is one of more than 20 States that have adopted the Streamlined Sales and Use Tax Agreement

— This may be particularly important in analyzing other state statutes, or how the laws affect other sellers- Foreign sellers may be able to argue that these laws, as applied to them, discriminate or are

unduly burdensome

What are the implications for sellers?


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Immediate considerations— A number of states have laws similar or substantially similar to South Dakota’s

- The effective dates of these laws varies by state and they must be reviewed carefully— In certain states, the state is enjoined from enforcing the laws until litigation is resolved and the laws

can be applied prospectively only— In other states that’s not explicit and it’s unclear how states will act going forward or whether any state will

attempt to apply these provisions retroactively— There are many other states that have no economic nexus rules— at least currently

State responses— Certain states have already issued guidance or proposed legislation (NJ) in light of the decision

- Sellers will need to carefully track state responses and act accordingly

What are the implications for sellers?


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Economic nexusState Threshold Effective Date

Alabama $250,000 and one or more nexus-creating activities October 1, 2018

Connecticut Regular or systematic solicitation of sales, plus $250,000 and200 transactions

December 1, 2018 (previous standard in effect until December 1, 2018)

Hawaii $100,000 or 200 transactions July 1, 2018

Illinois $100,000 or 200 transactions October 1, 2018

Indiana $100,000 or 200 transactions TBD (pending resolution of state litigation regarding economic nexus law)

Iowa $100,000 or 200 transactions January 1, 2019

Kentucky $100,000 or 200 transactions July 1, 2018

Louisiana $100,000 or 200 transactions TBD (when US Supreme Court rules the SD statute constitutional)

Maine $100,000 or 200 transactions TBD (effective October 1, 2017, but unclear whenenforcement will begin)


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Economic nexus, continuedState Threshold Effective Date

Minnesota Regular or systematic solicitation of sales, plus either 100 transactions or 10 or more transactions totaling over $100,000 TBD

Mississippi $250,000 plus purposeful or systematic exploitation of the Mississippi market

TBD (effective December 1, 2017, but unclear when enforcement will begin)

North Dakota $100,000 or 200 transactions October 1, 2018

South Dakota $100,000 or 200 transactions TBD (pending resolution of state Wayfair litigation)

Tennessee $500,000 and regular or systematic solicitation TBD (pending resolution of state litigation regarding state economic nexus rule and approval by General Assembly)

Vermont Regular, systematic, or seasonal solicitation of sales, plus either $100,000 or 200 transactions July 1, 2018

Wisconsin TBD (likely $100,000 or 200 transactions) October 1, 2018

Wyoming $100,000 or 200 transactions TBD (pending resolution of state litigation regarding economic nexus law)


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Economic nexus, continued: threshold + software-related presence

State Threshold Effective Date

Massachusetts $500,000 and 100 transactions for retailers with software in state (apps, cookies, etc.) October 1, 2017

Ohio $500,000 for retailers with software or content distribution networks in state January 1, 2018


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— In states without economic nexus, the ability to compel collection will depend on the wording of the state’s law- TEI’s Wayfair amicus brief provided that 20 states “have statutory or regulatory provisions extending the

obligation for out-of-state retailers to register, collect, and remit tax to the extent permitted by the U.S. Constitution or using criteria that fall short of Quill's physical presence standard”

— Some states may react through administrative guidance; other states may adopt legislation quickly- Wisconsin issued administrative guidance indicating that it will require remote sellers that exceed certain

thresholds to collect tax beginning October 1, 2018

Congress may step in and we could possibly see enactment of the Marketplace Fairness Act or Remote Transactions Parity Act

Non-economic nexus states


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The repeal of the Quill physical presence standard has corporate income tax implications, as well— Although many states assert economic nexus for corporate income tax purposes, not all states have specific

or bright-line economic nexus authority - This may change in light of the repeal of the physical presence standard

— Taxpayers that have economic activity in a state in which they are not currently filing corporate income tax returns may want to carefully consider whether those filing positions should be revised post-Wayfair

Income tax consequences

Initial state reactions to Wayfair


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Louisiana— Louisiana’s economic nexus law is currently effective when the U.S. Supreme Court rules that South Dakota’s law

is constitutional; the DOR issued an explanatory statement indicating that a final decision on Wayfair has not been reached (due to the remand to the SD Supreme Court)

— Legislature introduced bill (SB 1) to delay the effective date of economic nexus law to August 1, 2018Minnesota— DOR issued statement that it will provide further guidance within 30 days on how Wayfair affects online retailers,

remote sellers, and marketplace providersMississippi— DOR issued statement noting that remote sellers meeting the $250,000 threshold of sales in the prior

12-month period must now register and collect sales tax from MS customersNew Jersey— Introduced two bills (AB 4261 and SB 2974) that would adopt a sales tax economic nexus threshold akin to

South Dakota’s: $100,000 of sales or 200 transactions with NJ customersNorth Dakota— DOR issued statement on its newly created remote seller webpage that remote sellers meeting its $100,000 of

sales or 200 transactions threshold must now register and collect sales tax from ND customers

Initial state reactions to Wayfair

What’s next – key considerations and next steps


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Infrastructure needs change overnight!

Need for compliance and reconciliation processes/tools to meet deadlines

Simple/non-existent sales tax compliance and reconciliation process

Nexus in several statesNexus in few/no states

Minimal sales tax research maintenance Tax research (rates/rules) required for multiple jurisdictions

Prepare for auditsMinimal/no audits or potential audits

Quick change in rules = Quick change in infrastructure needs for sales tax

“Zero to Prepared” immediately


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Step 1 – Review Existing and Post-Quill Nexus Footprint— Existing filing obligations – consider VDA/amnesty programs— Assess post-Quill filing obligationsStep 2 – Consider the Overall Business Implications— Communicate with all stakeholders in the organization— Involve legal, marketing, supply chain, technology, direct tax, financeStep 3 – Review Product/Service Mix— Develop taxability determinations— Examine bundled items Step 4 – Review and Consider Technology Needs— What do you have and what are your options?— Consider tax engine upgrades or outsourcing compliance processesStep 5 – Filing Compliance and Initial Registration— Register in new jurisdictions— Ensure that all returns and remittances are timely filedStep 6– Monitor Tax Updates and Handle State Audits— Stay abreast of tax updates (nexus, rates, exemptions, etc.)— Prepare for increased audit activity with new jurisdictions

Navigating a world without Quill


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Post-Quill readiness checklistHas your company reviewed its existing and Post-Quill nexus footprint?

— Nexus Impact Review— VDA and Business Registration

Has your company evaluated its technology needs now that Quillhas been overturned?

— Diagnostic Review— Software Selection — Tax Engine Implementation

Does your company's compliance team have the capacity to register in new jurisdictions, file all necessary returns, and maintain exemption certificates?

— Indirect Tax Compliance Service— Exemption Certificate Support Service— Business License Registration Service

Is your company able to monitor tax updates and handle increased state audits?

— Updates on tax legislation and changes— Audit support and controversy

Has your company considered the overall business implications of Quill being overturned?

— Business Strategy Roadmap— Tax Transformation & Business Change Management— Potential ASC 450 Impact

Has your company reviewed its product/service mix in each new jurisdiction to determine taxability?

— Taxability Review— Product Mapping

YES

YES

YES

YES

YES

Issue ActionNO

NO

NO

NO

NO

NO

Sales & use tax & VAT considerations affecting FS industry


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Indirect tax treatment of technology products and services can be challenging. Tax treatment may vary depending on the nature of the purchase as well as where the product or service is used.

The following are examples of technology product categories which may have discrete tax treatments: — Pre-written software (e.g. Microsoft, Oracle, SAP)

- Electronically delivered- Delivered tangibly

— Custom/customized software— Cloud services (e.g. Workday, Sungard, Rackspace) — Professional services— Information services (e.g. Bloomberg, Moody’s, Dow Jones)— Software support (e.g., Data Processing, Use of Software, etc.)

Indirect tax treatment of technology


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Characterization of software and other related services

e.g., New York, Indiana, Massachusetts, Pennsylvania

e.g., Texas, Ohio, Washington, New York, New Jersey

e.g., South Carolina

e.g., Virginia, Tennessee

e.g., Arizona, City of Chicago

Tangible personal property (TPP)

Information, data processing, digital automated, or other computer services

Communication services

Personal service or intangible right

Rental or lease of TPP


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Potential Risk— If software is procured and paid from an address in a taxing jurisdiction that does not impose indirect tax on software

and deployed or sourced to a taxing jurisdiction that imposes indirect tax on software, then the company is likely underpaying indirect tax and creating a potential indirect tax liability.

— If software is procured and paid from an address in a taxing jurisdiction with a lower indirect tax rate and deployed or sourced to a taxing jurisdiction with a higher indirect tax rate, then the company is likely underpaying indirect tax on software purchases and creating a potential indirect tax liability on the delta.

— Indirect taxes may be levied in multiple jurisdictions if software is used in more than one taxing jurisdiction that imposes tax on software. The burden of proof will be on the company to maintain the documentation to support the applicable indirect tax due based on the location to which the software is sourced or deployed.

Potential Opportunity— If software is procured and paid from an address in a taxing jurisdiction that imposes indirect tax on software and

deployed or sourced to a taxing jurisdiction that does not impose indirect tax on software, then the company could be overpaying indirect tax on software purchases and may potentially obtain refunds.

— If software is procured and paid from an address in a taxing jurisdiction with a higher indirect tax rate and deployed or sourced to a taxing jurisdiction with a lower indirect tax rate, then the company is likely overpaying indirect tax on software purchases and may potentially obtain refunds or reduce the amount of tax cost on these transactions.

— It may be possible to use potential refunds to offset potential liabilities.

Sourcing of software and other related services


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Technology sourcing example

— Purchase was treated as tangible software and sourced to bill-to address.

— New York City use tax was erroneously accrued on 100% of the purchase price.

Incorrect Data

— Purchase was treated as electronically delivered software and sourced based on locations of users.

— New York City use tax was accrued on 50% of the purchase price.

— California exempts electronically delivered software. No California use tax was accrued.

Correct Data

Indirect tax cost optimization can be achieved by allocating indirect tax based on correct tax classification, deployment location, and user location.

Example PurchaseCharacterization: Electronically delivered software license Bill to Address: New York City, NYUser Locations: Los Angeles, CA 50% & New York City, NY 50%

50% 0%100%


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Nexus— Nexus Review (i.e. performed on a legal entity basis)— Sales/Use Tax Registration/Filing Obligation (which legal entity has obligation?)

- even if $0 returns

Taxability — Review Revenue Streams and Procurement Transactions— Exemption/Resale Certificates— Sourcing of Sale or Purchase Transactions (i.e. benefit received/user location; goods movement)— Tax Rates (i.e. state/local/county/special districts)

Compliance— Procurement/ERP Systems Configuration— Invoicing: vendor of record/bill-to/ship-to/usage location— Filing of sales/use tax returns— Documentation/Retention Requirements-Audit Support— Mitigation: Voluntary Disclosure Agreements/Amnesty programs

Sales & use tax considerations for FS taxpayers


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Revenue Streams:— Technology enabled solutions (i.e. SaaS; market data)

- Samples: online banking; access to databases; apps; risk modeling software; services agreements with technology included

— Inter-Company agreements- M&A activity

— Characterization & sourcing (who; what; where; how)

Procurement:— IT/Software— Co-location services— Real estate/Leasehold improvements— Soft dollar transactions— Taxable services— Market data/Advertising/Promotional materials— Expense reimbursements/Inter-company charge backs

Sales & use tax considerations for FS taxpayers: revenue streams & procurement


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Indiana R.R. ST 15-09: online banking and related cloud-based products— Revenue Ruling #2015-09ST (April 13, 2017)

— This ruling involved an out-of-state corporation with customers located throughout the U.S., including Indiana. The Company’s customers are banks and credit unions (“Financial Institutions”). The Company is the outsourced provider of online banking (e.g., online banking, online bill payment, finance and budget tool, and mobile banking) for Financial Institutions’ customers (“Account Holders”).

— The Company does not charge Financial Institutions for any software (except for fees to Financial Institutions for downloaded mobile banking applications). Agreements between the Financial Institutions and the Company are for licenses of services and not the licenses of software.

— Under Indiana’s statutes and guidance, the Company’s sales of online banking, online bill payment and mobile banking products are not subject to Indiana’s sales and use tax. - Sales of these online products are sales of nontaxable services. In addition, they do not meet the definition of

telecommunication services.

— However, the Company’s sales of the finance and budget tool and electronic downloads of its mobile banking application by Account Holders within Indiana are subject to sales and use tax as the sale of computer software.- Sales of finance and budget tools and the electronic download of the mobile banking application within

Indiana are transfers of tangible personal property subject to sales and use tax unless a federal credit union purchases them.


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American United Life Insurance Co. v. Ind. Dept. of Rev., No. 49T10-1610-TA-00053 (Oct. 27, 2017)— This matter involved American United Life Insurance Company’s (“AUL”) request for refund for use tax paid to

Indiana, including local use tax, on the purchase price of software that was delivered to AUL and first loaded on its servers in Texas but subsequently used in Indiana.

— AUL paid use tax to Texas that included state-level use tax of 6.25% and 2% for local-level use taxes. AUL also paid Indiana use tax on the purchase price of the software at the rate of 7%.

— The Indiana Tax Court (“Court”) held that AUL was entitled to a credit against its Indiana use tax liability for the full amount of use tax paid to Texas.

— In so holding, the Court rejected the Indiana Department of Revenue’s (“Department”) argument that the credit only applied to state-level sales tax and not local-level taxes. The Court also denied the Department’s plea to rewrite the relevant Indiana statute to reflect the Department’s narrow interpretation of credits allowed by adding the word “state” in various places.


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Why are financial services usually exempt from VAT/GST + other approaches Financial services are typically VAT / GST exempt in most countries because:

1. It is difficult to measure the “value added” on a transaction-by-transaction basis or value is significantly inflated.

2. Difficult to identify a transaction (e.g. derivatives, life assurance)3. Exemption from VAT/GST ensures, in an economic sense, that the imposition of the tax falls on

the financial services provider (e.g. the bank or the insurer)

More Recent Challenges1. Introduction of other indirect taxes – e.g. insurance premium taxes2. Extend VAT to general insurance premiums and associated brokerage fees3. Moves to tax interest


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VAT considerations for financial businesses?1. VATable costs associated with exempt supplies are not recoverable / available for credit. This

increases P&L and Balance Sheet costs for businesses – up to 20% increase on non-salary costs

2. Internal recharges creates significant additional VAT costs – VAT is a barrier to outsourcing or shared service centers. Need to consider interaction of VAT with TP.

3. Outsourcing / intermediary services can be exempt depending on nature of supply.

4. Complexity around scope of exemptions for financial services.

5. Countries can vary in their interpretation of scope (for example EU – broad; Australia, Singapore – narrow).

6. Determining amount of credit for VAT incurred on costs. Most financial institutions provide a mix of exempt and taxable supplies – can be difficult to determine the appropriate amount of VAT credit.

7. Apportionment calculation can be a complicated and may require negotiation / agreement with the tax authorities.

What questions do you have?

Thank you


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DENNIS C PRESTIAPrincipalKPMG State and Local Tax PracticeKPMG LLP560 Lexington AvenueNew York, NY 10022Tel 212-872-6891Fax 212-954-5171Cell [email protected]

Function and SpecializationDennis specializes in all aspects of Sales and Transaction Tax and Unclaimed Property matters.

Professional Associations• International Telecard Association

(voting member)• Institute for Professionals in Taxation

(Sales Tax and Property Taxation sections)• Broadband Tax Institute• Unclaimed Property Professionals

Organization (UPPO)

Education, Licenses & Certifications• B.B.A., Business Administration and

Accounting, Pace University

BackgroundDennis is a tax principal and serves as the partner in charge of KPMG’s Metro New York Indirect Tax Practice. Dennis joined the firm’s New York office in 1992 and was admitted to the partnership in 2002. Dennis is a graduate of the Firm’s Lead Partner Academy Program.

Professional and Industry ExperienceDennis has over twenty-five years of state and local tax experience who serves many of KPMG’s largest multinational clients. His clients include numerous Fortune 1000 companies operating in all industry sectors with focus in the communications and media line of business. He provides state and local tax planning and consulting services to a diverse client base. He also serves as a national resource for multi-state indirect tax and unclaimedproperty consulting services for high-end clients of the Firm. Over the years, Dennis has assisted clients with audit controversies, special initiatives, mergers and acquisitions and other transactional tax advice. He has also represented clients before various state and local tax authorities. He has conducted national Reverse Audit engagements to determine planning opportunities, potential under-compliance or over-compliance and the sales and use tax implications of specific transactions. In addition, Dennis has extensive experience in assisting organizationswith analyzing current policies and procedures and recommending process re-design improvement and/or automation solutions to help companies enhance their overall level of compliance.To keep the flow of ideas fresh and well grounded in the client interest, Dennis sits on KPMG's National Indirect Taxand Cloud Computing Steering Committees.Dennis represents the Northeast region for the National Audit Defense and Risk Advisory (Transaction Tax) Initiatives for KPMG.

Publications and Speaking Engagements• Frequently speaks on sales and transactions tax-related issues to tax associations throughout the country.• Conducts seminars for clients to establish and implement internal control compliance procedures, enabling

clients to save direct tax dollars as well as increase tax compliance efficiency and accuracy.• Contributes to the development of KPMG sales and transactions tax and unclaimed property courses

attended nationwide.• Contributing author for The World Leasing Yearbook (IEuromoney Institutional Investor PLC) and The Monthly

Insurance News Magazine (BEST Review).


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BackgroundDiane E. Dorr is a Managing Director in KPMG LLP’s New York State and Local Tax Practice with over 16 years of experience in multi-state sales and use tax consulting matters.Professional and Industry ExperienceDiane has provided sales and use tax audit representation, consulting, refund analysis, strategic planning, ERP consulting, and sales and use tax compliance policy and procedure reviews to companies having a global presence in the financial services, cloud computing/high technology, healthcare/life sciences, manufacturing and retail industries.Sales/Use Taxability & Technical Skills• Responsible for reviewing, revising, and/or preparing 50-state product/service taxability matrices• Responsible for reviewing and providing guidance in connection with mapping products/services (for sales) as

well as procurement activity to tax codes in ERP systems to drive correct taxability determinations• Responsible for reviewing, revising, and/or preparing sales/use taxability memorandum outlining research

results of multi-state sales/use tax issues• Responsible for drafting and filing Private Letter Rulings with various states in connection with multi-state

sales/use tax issues• Responsible for supervising multiple person teams in managing and administering multi-jurisdiction sales/use

tax audits• Responsible for supervising and managing multiple person teams in identifying, preparing, and filing multi-state

sales/use tax refunds for companies having a national presence• Responsible for negotiating and securing state Voluntary Disclosure Agreements; successfully abating penalties,

and registering companies having a national presence in multiple states for sales/use tax purposes• Responsible for preparing multi-state sales/use tax due diligence reviews of proposed mergers and acquisitionsPublications and Speaking Engagements• Frequently speaks and contributes content on sales and transactions tax-related issues to tax associations

throughout the country (Interstate Tax Corporation; IPT; Thomson Reuters share forums).• Conducts seminars for clients to establish and implement internal control compliance procedures, enabling

clients to save direct tax dollars as well as increase tax compliance efficiency and accuracy.• Contributes to the development of KPMG sales and transactions tax courses attended nationwide

DIANE E. DORRManaging Director

KPMG LLP560 Lexington AvenueNew York, NY 10022Tel 212-954-1466Fax 212-808-0917Cell [email protected]

Function and SpecializationDiane specializes in U.S. Indirect Tax

Professional Associations• Licensed Member of Massachusetts Bar• Licensed Member of US Supreme Judicial

Court

Education, Licenses & Certifications• LL.M., Taxation,

Boston University School of Law• J.D., Suffolk University Law School• M.S., Finance, Suffolk University

School of Management• B.S., Bus. Adm. & Management, Boston

University School of Management


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ANTHONY NGTax Managing Director

KPMG LLP560 Lexington AvenueNew York, NY 10022Tel 212-954-8035Fax 212-937-5236Cell [email protected]

Professional AssociationsChartered Institute of Taxation, United Kingdom

Education, Licenses & Certifications• BSc (Hons) University of Bristol,

United Kingdom• Associate Member of the Chartered Institute

of Taxation, United Kingdom

LanguagesEnglish, Cantonese

Function and SpecializationTony is a member of the U.S. SALT practice specializing in Value Added Taxes. Tony is a specialist in Global VAT with a broad breadth of experience amongst multiple jurisdictions including Asia Pacific, Latin America and a particular area of specialty being VAT in the European Union.

BackgroundTony is a Tax Managing Director in the US State and Local Tax (SALT) practice specializing in International Value Added Taxes. Tony is originally from the UK, and relocated to the US from his native London and is now based in KPMG’s New York Offices Tony has worked in tax for over 15 years, with 14 of those years devoted to practicing in international VAT where he has had experience in a variety of industries, including: financial services, telecommunications; the food and drinks sector; pharmaceuticals; healthcare; gas; oil and energy; and the manufacturing sector. Tony has also dealt with the VAT implications of M&A transactions. Tony leads the Global VAT compliance practice in the US and leads some of KPMG’s largest VAT compliance engagements. Tony has worked in tax for over 15 years, with 14 of those years devoted to practicing in international VAT where he has had experience in a variety of industries, including: financial services, telecommunications; the food and drinks sector; pharmaceuticals; healthcare; gas; oil and energy; and the manufacturing sector. Tony has also dealt with the VAT implications of M&A transactions. Tony leads the Global VAT compliance practice in the U.S. and leads some of KPMG’s largest VAT compliance engagements.

Professional and Industry ExperiencePrior to joining KPMG, Tony started out with another global tax practice in London. During his time there, Tony helped his multi-national clients to manage their global indirect tax footprint, which included managing VAT risks, as well as providing advice and solutions around expansion into the global marketplace.More recently, Tony was part of the global in-house tax team for a multinational alcoholic beverages company based in London where he was the lead business partner for global VAT responsible for overseeing the global indirect tax affairs of the group in over 45 countries. Tony was responsible for managing group wide global indirect tax risks including advising the relevant teams on: new business ventures; supplier and customer contracts; global supply chains; and providing strategic input into managing overseas VAT audits. A major part of his role included seeking out opportunities within the business to ensure that it was structuring its operations in such a manner so as to maximize VAT opportunities and efficiencies, whilst at the same time minimizing VAT risks. A significant part of Tony’s role at the company involved interacting directly with its outsource service center in Budapest, Hungary. As part of this, he was required to provide strategic input into the set-up of VAT compliance operations. This also included carrying out detailed audits and on-site reviews of the various work-streams and processes and mapping of accountabilities and responsibilities for the various finance teams in Europe, Asia and North America. This required an in-depth knowledge of how financial systems interact with global indirect taxes from a tax technical perspective. Tony was also required to bring together a large number of different stakeholders to formulate a global VAT strategy which would clearly map across the entire business from local finance teams, across group tax and onto the Finance Directors and CFO .


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Effective Tax Rate Planning• Provided & implemented State & Local tax planning initiatives which enabled the Jefferies

related entities to bring the variance of Book ETR to Income Tax Expense (Cash) per return from 42% to 37% from 2007 to present.

• Created strategies for the Jefferies related entities to implement beneficial tax filing positions and file State & Local Tax refund claims. Ultimately, these resulted in returning cash and then reversal of FIN 48 reserves from successfully settled tax exams for state & local corporate income and use tax issues totaling in excess of $20 Million. This represents a fraction of the future potential benefits.

• Identified and implemented State and local tax planning that enabled the Quick & Reilly entities to bring Book ETR from 48% in 1994 to 38% by 2002. Successfully managed Cash ETR from 48% to 34% in same period.

• Extensive professional FIN 48 judgement and expertise in managing and determining necessary balance sheet support for State and Local Tax strategies implemented.

• Managed tax account impact from successful tax planning strategies in publicly traded company environment.

Client Service• Served as Grant Thornton’s State and Local tax practice leader for financial services related

clients including publicly traded, privately held and pass through entities.• Served as the primary State and Local tax relationship on several mid-market accounts.

Helped create and managed over $3 million-dollar state and local financial service practice at Grant Thornton from 2006 – February 2010. Helped secure large state and local tax consulting relationships and projects from securities broker/dealers, regulated investment company advisors and other non-regulated asset managers.

• Provided professional advice that enable clients to implement numerous filing strategies resulting in beneficial ETR impact as well as returning cash tax refunds.

Domestic Tax Controversies• Extensive practical and technical experience in representing, negotiating and settling state

and local tax examination related cases of employers and client over career.• Expertise in successfully defending Allocation and Apportionment factor planning in post-tax

return filing environment.• Provided necessary research, prepared position papers and advocate protests to support

State and Local Tax Planning ideas for financial services clients.• Provided expert testimony in administrative tax proceeding.

Securities Industry Expertise• Successfully lobbied and impacted New York State, City and New Jersey legislative

efforts related to financial services related taxation from 1995 – March 2003 and March 2010 to present. Participated extensively in 2014 and 2015 New York State and City Corporate Tax reform efforts.

• Co-lead the securities industry effort of the financial services impact of Franchise Tax Board Market State regulation.25136-2

• Represented Financial Services Industry on e-commerce taxation projects from The National Tax Association and as SIA advisor on Advisory Commission on Electronic Commerce

• Chairman of SIA State & Local Multistate Task Force in 2002.Domestic Tax Consulting• Broad domestic state and local tax knowledge base in financial services as a result of

managing large broker/dealers, asset managers and banking entities relationships.• Corporate acquisition, restructuring and entity level planning.• State & Local consolidated, combined and unitary group issues and planning; and• State tax planning including under Commerce Clause guidelines, nexus studies and

distortion related modeling.Accounting for Income Taxes• Managed the domestic tax provision for The Quick & Reilly Group Inc. (NYSE-BQR until

2/1/98); then the Section 20 and non-banking subsidiaries of Fleet Financial Group, FleetBoston (NYSE-FBF);

• Managed the domestic state and local tax provision for The Jefferies Group Inc. & Subsidiaries ((NYSE-JEF until 2/28/03) March 2010 – 2013) then Jefferies Group LLC & Subsidiaries ((NYSE-LUK) March 2013 to present).

• Provide Client services in domestic SFAS 109 provision and FIN 48 analysis and support.Tax Compliance• Managed all aspects of tax compliance (federal. State and local) responsibility for the

Quick & Reilly related entities.• Managed the domestic state and local tax compliance for the Jefferies Group Inc. &

Subsidiaries (March 2010 – 2013) then Jefferies Group LLC & Subsidiaries (March 2013 to present).

• Created Allocation and Apportionment modeling analysis and computations to support domestic State and Local tax strategies.

• Developed internal processes to gather market-based sourcing for securities broker/dealer revenue streams based upon the New York defined customer responsible for paying standard.

WILLIAM A. LUNA IIIManaging Director, Head of State and Local Tax

Jefferies LLC

Tel 212-707-6458 | Cell 914-224-3579 | [email protected] University – Bronx, New York B.S. Business Administration/Public AccountingWilliam is a CPA licensed in New York with extensive experience in effective tax rate planning, domestic tax controversies, consulting and compliance in publicly traded corporate financial services environments and large accounting firm client servicing environment.

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