Meeting Local Finance Requirements

Ralf Schaufler – NycomedBob Maurau – DeloitteBruno Vandekerckhove – Deloitte

11th Annual European Shared Services & Outsourcing Week 201112th May 2011 - Amsterdam

Meeting local Finance requirements: Adopting a local-country compliance strategy that works for your SSO

© 2010 Deloitte LLP. Private and confidential1

Agenda

TopicIntroductions

Centralisation

Approaching Harmonisation- Efficiently specialised tax & accounting groups- Globally operating tax & accounting groups - Worldclass compliance technologies and processes- Knowledge Systems- Cosourcing Solutions- Looking AheadInteractive Discussion

© 2010 Deloitte LLP. Private and confidential

Market trends From local to central delivery of compliance services

time

cent

raliz

atio

n

LocalVAT

LocalSTAT

LocalCIT

Local FIN

SSC FIN

LocalVAT

LocalSTAT

LocalCIT

CoEVAT

LocalCIT

SSC FIN

Organizations move back office functions to Shared Service Centers

More functions (a.o. compliance) are centralized in SSC or HQ

A Single Point of

Contact is not enough.CoE

STAT


Market trends From local to central delivery of compliance services

3 EMEA Accounting & Tax Compliance Center

• Shared Service Centers are maturing and organizations are expanding them to include more types of processes: multifunctional Shared Service Centers

• Enterprises are pursuing a hybrid service delivery strategy for support processes, mixing shared services (on- and offshore) and outsourcing

• Reducing costs and improving controls remain top benefits of Shared Services operations, however many organizations are achieving other benefits, including process efficiency and increased transparency and visibility of data

• The importance of access to a high quality workforce will only increase over time as competition for low cost resources increases and companies move to lower cost regions and geographies with decreasing pools of skilled resources

• Increased country-adoption of IFRS decreases the need for local GAAP expertise


Local compliance in the global finance pyramid

FP&AControl

Local&

GlobalReporting

Transaction Processing

ê Transaction Processing•Accounts Payable:

• Invoice Processing,• Payment run,• Vendor management, …

•Accounts Receivable:• Order intake,• Cash application, …

•Fixed Assets accounting•General Ledger accounting

• Financial Planning & Analysis•Strategic Decisions•Key Business Policies•Capital Expenditures•Determination of Reserve Levels•External Reporting•Cost Accounting•Business Analysis

ê Reporting•Tax Filings•Statutory Reports•Management reporting•Shareholder reporting•Routine & Exception Analysis

Local languageLocal expertiseLocal presence

REGIONAL/GLOBAL

SHARED SERVICE

LOCAL

GLOBAL


Centralized local compliance in global finance

FP&AControl

Reporting


FP&AControl

Reporting


FP&AControl

Reporting


FP&AControl

Reporting


Strategic decisionsFinancial & Business Controlling

Treasury & Investor relations

Shared Services for transactional processing

Leverage knowledge, technology & peopleProcess optimization & standardization

Increased control over the process and the cost

Local&

Global

Local&

Global

Local&

Global

Local&

Global


Sao Paulo

Brussels

Singapore

Chicago

Hyderabad

DeloitteC&W

Bracknell

Approaching harmonisation: Introduction The respective organisations’ CoEs

Washington

Chennai


Approaching Global Harmonisation Step 1 – Bring efficiencies in your tax and accounting groups

Create consulting and compliance teams

Create benefits of scale

Use your group shared services facilities

Centralise outsourcing vendors

7


Approaching Global Harmonisation Step 2 – Make your tax and accounting teams operate globally

Indirect taxes :• tax engines & ERP deployments

• Customs regimes

• Supply chain

Corporate Income taxes :• Transfer pricing

• Rulings

• ETR

Accounting:• Accounting principles

• Standardisation of processes

• Management reporting

8


Approaching Global Harmonisation Step 3 – Bring world class compliance technologies and processes

Tax generation software :

•US tax returns

•FAS 109 (ASC 740) / IAS 12

•VAT return generation

Global Dashboards & Trackers

•US Tax Returns

•Indirect Tax Returns & Sales and Use Taxes

•Corporate Taxes Returns

•Statutory Accounts

Dual GAAP coded systems

•Generating local country TBs

•Generating local country VAT returns9


Approaching Global Harmonisation Step 4 – Knowledge systems

Regulatory Challenges :• What to keep local• What local specifics to respect, even when centralised• Smoke & mirrors

10


Report Name Periodicity E possibility Language

Financial Reporting

Statutory financial statements Annually Paper Portuguese

Tax Reporting

VAT return Monthly E-filing Portuguese

VAT payment Monthly E-filing or Paper English accepted

Withholding income taxes return Monthly E-filing Portuguese

Withholding income taxes payment Monthly E-filing or Paper English accepted

Stamp tax return Upon request E-filing Portuguese

Stamp tax payment Monthly E-filing or Paper English accepted

CIT return (Modelo 22) Annually E-filing Portuguese

CIT tax payment Annually E-filing or Paper English accepted

CIT advance payment Monthly E-filing English accepted

Special CIT advance payment Monthly E-filing Portuguese

Yearly income tax report - Modelo 30 (payments made to non resident tax payers) Annually E-filing Portuguese

Yearly income tax report - Modelo 10 (payments made to resident tax payers) Annually E-filing or Paper Portuguese

Knowledge Systems Portugal - Mandatory Statutory Reports and Filings



Tax Reporting

Modelo 19 (stock options) Annually Paper English accepted

Avoidance of Double Taxation Forms (Modelo 21 RFI) Annually Paper English accepted

Avoidance of Double Taxation Forms - Interests and Royalties Intra-EU (Modelo 01- DJR and 02-DJR)

Annually Paper English accepted

IES/ Informação Empresarial Simplificada Annually E-filing Portuguese

IVNES – Inquérito mensal ao volume de negócios e emprego e serviços (INE) Monthly E-filing Portuguese

PTRE – Inquérito trimestral as empresas não financeiras (INE) Quarterly E-filing Portuguese

Intrastat report Monthly E-filing English accepted

Ecotaxes Monthly E-filing or Paper Portuguese

Infarmed report Monthly E-filing Portuguese

Cash Polling Report - Banco de Portugal Monthly E-filing Portuguese

Social Security file Monthly E-filing Portuguese




Tax Reporting

Social Security payment Monthly E-filing or Paper Portuguese

Employees Income Tax statement Annually Paper Portuguese

Personnel Annual Matrix - Quadro de pessoal Annually E-filing Portuguese

Personnel Annual report - Balanço Social Annually Paper Portuguese

Information to labour authorities of the admissions or terminations under a fixed term contract

Quarterly Paper Portuguese

Overtime report Bi-Annually Paper Portuguese

Management report Annually Paper Portuguese

Transfer Pricing File Annually Paper Portuguese

Tax File Annually Paper Portuguese

SAFT - PT Paper English accepted



CountrySummary

Finance- Related activities

required to be conducted in-country

Anticipated changes

Description Minimum/Typical Activities Required in-country Source

Accounting Books must be stored in Portugal and Accounting records accessibility must be immediate. Books must be certified by an official and duly registered “bookkeeper’

There is a local mandated Chart of Accounts. However, changes are foreseen in this respect.

Accounting records must be kept in accounting software duly approved by the Portuguese Tax Authorities, monthly updated and in accordance with Official Chart of Accounts.

Language difficulties: All books, tax reports and communications with the authorities must be done in Portuguese.An specific format for the FA report must be respected.

Código do Imposto sobre o Valor Acrescentado- Código do Imposto sobre o Rendimento das Pessoas Colectivas-Lei Geral Tributaria-Decreto Lei nº79/2003 de 29 de Abril (Plano Oficial de Contabilidade)

Tax & Legal In practice, it is extremely difficult to pay taxes from foreign bank accounts, except for VAT purposes.

Treasury The payments to the Social Security and personnel withholding taxes must be done using a Portuguese bank account.

Audit A full statutory audit is required depending on the legal type/structure of the Company. To appoint the external auditor, the Company must do it in a quotaholders/ shareholders meeting

Código das Sociedades Comerciais

Payroll The personnel data should be available in Portuguese and at the company's local office,

Código do Trabalho

IFRS Is included in the Financial Statements

• Portugal holds several regulations that set limits to offshore most company activities into a SSC.• All books must remain in the country. They shall be certified by an official bookkeeper • Portuguese language is required in most documents and communications with the authorities.

A new Official Chart of Accounts and local GAAP are supposed to be implemented as of January, 1st 2010. The accounts as of 1st January, 2009 will need to be restated to this new set of books and new applicable rules, in order to be comparable.



Approaching Global Harmonisation Step 5 – Consider Cosourcing Solutions

•Temporary Measure

or

•Long Term strategic vision

15


Centralized compliance: insourcing versus co-sourcing


Pros Cons

Insourced

Close to business Hire/retain qualified people

Direct management & control Incomplete cross-border coverage

Predictable cost Hidden cost of local advisors

Inadequate trainings/technologies

Co-sourced

Better risk management Loss of in-house knowledge

Up-to-date on changes & technologies Longer communication line with business

Better control of headcount & cost

Better cross-border coverage


17

Finance Management

Periodical US GAAP/IFRS

Reports

MNC Financial Software /

ERP

Deloitte’s customized

ERP

Local Indirect Tax reporting

Conversion entries

(US -> Local GAAP)

CentreOf

Excellence

Local Deloitte office

Local Corporate Tax

filing

Local Financial Statements

Deloitte OnLine with integrated Statutory Calendar Standardized

reporting

DeloitteMNC

Copyright © 2010 Deloitte Development LLC. All rights reserved.17

Approaching Global Harmonisation


Our co-sourced model of centralized compliance


Sha

red

Ser

vice

Cen

ter

EMEA Accounting

& Tax Compliance

Center

Web

-ena

bled

te

chno

logy

Deloitte Russia

Deloitte Serbia

Deloitte Turkey

Russian authorities

Serbian authorities

Turkish auhorities

German authorities

Spanish authorities

Polish authorities

Finance management

Electronic exchange of data

Standardized reporting


Advantages of centralized compliance


• Standard communication• Adding value by making the compliance function easier

• To adapt• To audit• To adjust• To reconcile• To automate• To improve• To control• To manage• To change

• Single Point of Contact combined with global reach and local expertise


High level view on co-sourced compliance processes


CalculateTax

Prepayments

DetermineTax Provision

FAS 109

Compute Corporate

Tax Return

DetermineFIN 48

Conversion MGMNT GAAP to

Local GAAP

Compute Tax Provision

Statutory Audit

adjustments

Financial Statements

Data review Draft return preparation

FeedbackFinal return preparation

& submission

Indirect tax

Statutory accounting

Corporate tax

Sha

red

Ser

vice

Cen

ter

Local mandatory reporting

Standardize d reporting


Cosourcing Rules of the Game

1. Strong Partnership

2. A strong PMO function comprising Vendor and Client

3. Strong governance, issue resolution, and contracting processes

4. Succesful transition and immediate global buy-in through quick wins

5. Timely and compliant filings monitored through a global dashboard

6. Automation and globally scalable processes

7. Global standardization of deliverables

8. A continuous process improvement program

9. Performance measurement

21


•IFRS

•Conversion of National Tax Legislations

•Common Consolidated Tax Base

Approaching Global Harmonisation Step 6 – Looking ahead


Round table


- Experiences- Best practices- Do’s & Dont’s- …


Approaching Global Harmonisation Data Repositories & Trackers

26

Secure, web- enabled technologies

Integrated data storage and global tracking calendar



27

Country eRooms

Up to 16GB of storage

Up to 4GB per filesize



28

Storing documents, underlying details

Capturing key data elements for global reporting

Full audit trail



29

Global overview eRoom

“Rolling up” all country level entries



30

Global reporting on key data elements

Automated xls- exports



31

Access to global tracking calendar

Statutory due dates for -Direct Taxes-Indirect Taxes-Financial Statements-And any bespoke statutory or business process



32

The confirmation task to kick off the process.

The calendar is prepopulated with over 100 statutory due dates



33

Web-enabled, global tracker

Executive level dashboard on compliance status with drilldown functionality



34

Drill down from period status to country status and eventually to individual task and responisble person

Meeting Local Finance Requirements

Business

Transcript of Meeting Local Finance Requirements