Services, GBS & BPO Conference - Deloitte UK evolution of compliance strategy from discrete...

Deloitte Shared

Services, GBS &

BPO Conference

Indirect Tax:

Delivering Best-in-

Class Compliance in

a GBS Environment

Berlin, Germany

Christophe de Waele &

Demian de Souza, Deloitte

22 – 23 September 2015

• The Current Landscape

• The Push to Centralisation

• What Others are Saying

• Stakeholders & Governance

• Components of Compliance

• Executing on a Strategy

Contents

2 Deloitte Shared Services, GBS & BPO Conference 2015

In Deloitte’s 2014 indirect tax client

survey, our clients identified indirect tax

compliance as their number 1 priority

area.

Only 30% of respondents to our global

compliance survey were happy that their

centralised compliance processes were

efficient.

Deloitte Shared Services, GBS & BPO Conference 2015`

The Current Landscape

Pressures on indirect tax teams

VAT is a big number

Imposed risk management regimes such as SAO

Public scrutiny and board room attention

Behaviour-based penalty regimes

Desire to “do more” with the same resources

New resourcing and delivery models, such as SSC/GBS

Increasing scope of ‘indirect’

taxes

More to manage alongside greater scrutiny over performance and compliance

The tax

team

Deloitte Shared Services, GBS & BPO Conference 2015

Operating model evolution

The evolution of compliance strategy from discrete functional-

and country-based models to integrated, global and cross functional services

Limited automation Medium automation

Sharing of tools and processes

Global

Maximum automation

One function Multi-function

Little sharing Full integration Co-location

Transactional and advisory

Local Regional

Two to three functions

Transactional

SSC geographical scope

Degree of automation

Functional scope

Degree of functional integration

Degree of value add

Outsourcing model Decentralized Coordinated, consolidated Centralized, Integrated

Prepared by separate local country teams

With ad-hoc use of advisors on

country by country basis

Tax and statutory accounts processes aligned

Co-ordinated global outsource

working with SSC

Shared service team prepares tax

returns and statutory accounts

Local support for quality assurance and specialist input

Tax and statutory accounts

Operating model


The Push to Centralisation

Market research - Compliance focus

Relative importance of factors in %

Current global compliance drivers for organisations and their management

* Global CRS Transformation survey conducted by Deloitte – December 2014



(% Happy)

Satisfaction with the current model for managing global compliance

Delivered and

managed locally

Delivered locally,

managed centrally

Delivered and

managed centrally

Method 1

Decentralised

Method 2

Co-ordinated

Method 3

Centralised



21% 14% 7% 5%

Indirect tax returns and payments

Global tax provision

Statutory accounts

Corporate income tax returns and

payments

Specific issues…

Does not perform as well for…

• Lack of control; monitoring; management

• Complications of local knowledge

• No central strategy


• Lack of communication from external partners

• Lack of skills/ expertise


• Less focus on these areas

• Problems with data collection/ integration


• Lack of communication from external partners

• No central strategy

• Lack of skills/ expertise

Satisfaction with the current model for managing global compliance


Market research - Key messages

• More centralised operating models

being deployed but the degree of

‘enthusiasm’ varies by process

• Increased use of selective outsourcing to

complement the in-house team and as a

catalyst for wider improvement or even

transformation

• The focus is now on more consistent

global processes and quicker, simpler

delivery, often through the better use of

technology


What Others are Saying

Centralised 41%

Decentralised 16%

Global tax department

19%

Other 4%

Centre of Excellence 4%

Outsourced to a third party 6%

What is your

organization's

approach to VAT

compliance?

JD Edwards 3%

Microsoft Dynamics

1%

Microsoft Excel 43%

Oracle 12%

PeopleSoft 4%

SAP 23%

ONESOURCE Indirect Tax Compliance

3%

Vertex 1%

Other 10%

What software do

you widely use to

prepare VAT

returns?

1 10%

2 to 5 48%

6 to 15 20%

16 to 25 1%

More than 25 10%

Don’t know 11%

How many IT

systems are

used to gather

data for VAT

accounting &

reporting?

Less than 1 day 7%

Up to 5 days 35%

Up to 10 days 18%

More than 10 days 17%

It varies 17%

Don't know 6%

How many FTE days

does it take to

prepare your VAT

return?

Very high automation (e.g. use of tax data

warehouse, automated analytical review of

VAT-sensitive information)

0%

Significant automation (e.g. highly customised

ERP process and/or use of tax engine

and/or specialist VAT return preparation

tools) 8%

Some automation (e.g. automated purchase or

invoice processing systems, including VAT

determination) 41%

Limited (e.g. heavily reliant on Excel)

49%

Don’t know 2%

To what extent

is your

organisation’s

VAT

compliance

automated?

Critical 12%

Very important 41% Important

31%

Somewhat important 10%

Not important 2%

Don’t know 4%

How important to

you is the

automation of VAT

compliance in your

organisation?

Stakeholders & Governance

Who are your stakeholders?

Indirect Tax

Tax Authorities

Internal Audit

Regulators

Business Unit Leaders and Finance

Staff

External Auditors

Wider Tax

Function


• In some respects centralised compliance makes stakeholder management easier but it does demand more

formality.

Satisfying your stakeholders

Document processes and controls for

completing Indirect Tax returns

Agree and publish guidelines for dealing with tax authorities in audits, assessments

and disclosures

Implement a process for identifying and reviewing high risk

countries/registrations

Document and data retention guidance

Regular review of indirect tax affairs to quantify risk areas

Reporting key performance metrics


Introducing the Operating Model Layers Shaping your Indirect Tax governance model

Level 1 –

Strategic

direction

Level 2 –

Key tax &

reporting

activities

Level 3 –

Supporting

infrastructure

Compliance strategy based on

needs of key stakeholders, clearly

communicated goals, roles and

responsibilities, governance

standards

Defined compliance processes

and controls for tax and reporting

activities by business division and

function

Infrastructure which supports and

monitors compliance controls all

activities, creating visibility over

tax compliance for Group Tax

function Deloitte Shared Services, GBS & BPO Conference 2015

Components of Compliance

The components of centralising compliance

People Knowledge Processes Technology

Local expertise

Centralisation of compliance


The right mix of people

An multi-disciplinary team comprising:

• Tax technical specialists

• Data management resources

• IT and Excel skillsets

• Accounting knowledge

• Project & Process managers and owners

• 3rd party providers where appropriate

Nationalities Skill sets

The right mix of talents to consolidate and

test data, submit returns, adapt systems

and handle relationships with wider

business and local tax authorities

People

People


Knowledge is a key to success

Periodical Newsletters

Strong Tax technical knowledge Practical “problem solving”

experience

Innovative EMEA Tax tools

EMEA Tax matrix and overviews

Updated tax Information per country

Expertise

Co

mb

inatio

n o

f S

up

po

rted

by

Perio

dic

al

ou

tpu

t

Continuous professional training

Regular updates of knowledge databases

Knowledge

Knowledge


Reliable processes

Processes

Processes • Important to recognise what

‘compliance’ encompasses

• Preparing the return is a single step in the

cycle

• Centralising compliance will surface pain

points that need to be addressed

• We’re becoming more adept at segmenting

and aligning steps across processes

• Styles of process improvement look different

across businesses but key steps are often

common


Technology trends

• VAT compliance technology market still evolving:

− The number of international solution providers is increasing: with an eye on

making the most of an under exploited market.

− Differing views on how much integration with the source financial systems is

needed

− Still a lot of excel automation being offered in the market

− No solution does it all… yet

• Underpinning technology solutions are supporting more flexible approaches to

delivery. Clients deciding how much Indirect Tax compliance they want to share

with a service provider will replace the ‘binary’ in house vs. outsource decision.

• The systems for managing the tax process, KPI data and document management

are becoming ‘standard’ in many Tax functions, but adoption and approach vary

from group to group.

Processes Technology


A case in point

Processes Technology

People

Knowledge

Processes

Technology


Executing on

a Strategy

Consider VAT’s position within the wider business

Identify your key stakeholders and determine how to work with them

Take stock of what technology solutions are already available in the GBS and across your tax groups: you may have more to play with than you expect

Focus on complementing and improving current processes rather than disrupting them

Don’t overcomplicate things: it puts adoption of change at risk

Technology is not a ‘silver bullet’. Sustainable improvement takes care and effort

There’s more than one route to ‘best in class’

Executing your strategy


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each of which is a legally separate and independent entity. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and

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Deloitte LLP is the United Kingdom member firm of DTTL.

This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will

depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of

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circumstances. Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material

in this publication.

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29 Deloitte Shared Services, GBS & BPO Conference 2015

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