VAT is managed by ERP systems, but who manages the ... - · PDF fileVAT is managed by ERP...

VAT is managed by ERP systems, but who manages the ERP systems?

Can true tax harmony be achieved in Africa?

Moderator Panel Redge de Swardt Associate Director Indirect Tax Services EY South Africa

Folkert Gaarlandt Adrian Van der Merwe

Partner Indirect Tax Services EY South Africa

Partner Advisory Performance Improvement EY South Africa

John Gikima

Associate Director Tax EY Kenya

Panel

Africa Tax Conference™ 2015

► Current landscape ► Mechanics of Value added tax (VAT) in any Enterprise Resource Planning

(ERP) system ► Best practice ► The future


Agenda

For a business to be able to accurately and efficiently respond to ever increasing Indirect tax challenges, its

Processes Systems People

have to work in harmony

Can this be achieved?



The more things change, the more they stay the same....or do they?

What is happening?

Poor cash flow management

Unknown risks and exposures

VAT risk monitoring

ERP set-up issues

Finance Transformation

“Cloud” or “Big data” initiatives and utilisation

Poor data quality

Lack of clarity over Supply chain

Inefficient or poorly controlled reporting

Data, Reconciliations

An increased need to link customs data with other transaction data

New tax requirements:


In our experience the typical areas to address vary significantly by client, they include:

Typical problem drivers Low High

People and Organisation

Staff processing transactions are not properly trained Staff processing transactions are not up to date with rules High turnover of transaction processing staff Lack of ownership of indirect tax compliance and reporting Inadequate input from tax specialist for reporting Complex tax and legal structure High level of intercompany transactions

Processes and Controls

High degree of non-standard processes High degree of manual intervention required in key processes Poor visibility over indirect tax compliance and reporting Late filing for compliance and reporting

Data and Technology

Poor master data Inaccurate coding leading to inaccurate compliance (and penalties) High number of customers and suppliers Systems not configured properly – reporting units, transaction codes Processes not automated optimally

Benchmark: EY experience with large multinationals



What is happening?

► In the past 10 years a number of African countries have legislated the use of electronic fiscal devices (“EFD’s”)

► How do they work?

► How widely are EFD’s being used? ► What impact does EFD’s have on a business’ ERP system?

Fiscal memory Revenue authorities

Revenue authorities


Does your ERP system make VAT decisions?

► Tax determination is dependent on:


Does your ERP system make VAT decisions?

Processing clerk selects tax code

ERP system uses data to propose a

tax code

ERP system is hard coded to automatically

select tax code


If change is needed, where do you begin?

What are the options and where do they fit in?

Tax determination Data processing Consolidation

and reporting



What do VAT systems and processes look like in a paperless world?

The legal framework of e-invoicing globally Spring 2015


Electronic invoicing and archiving:

Allowed

Mandatory (announced/planned/live)

Not regulated or not allowed

E-invoicing Trends and upcoming changes EU

► Directive 2014/24/EU – Electronic public tendering ► Digitization public tendering as of 18 April 2016 (some extensions apply) ► Electronic communication public tenders, electronic document exchange, etc. ► Objective to reinforce internal market ► Paradigm shift in public-private commercial relationships

► Directive 2014/55/EU – E-invoicing public procurement ► Linked to implementation Directive 2014/24/EU ► Mandatory acceptance of electronic invoices as of May 2014 ► Driving B2G-electronic invoicing throughout the EU


E-invoicing: Trends and upcoming changes Latin America

► Key considerations: ► High penetration of electronic invoicing and

archiving and growing ► Main driver: combat against government

enforcing tax compliance (>< North America) ► General features:

► Invoice validation by authorities (supplier => authorities => customer)

► Use of digital signatures certified by authorities ► Mandatory technology standards (e.g., XML)

► Mandatory e-invoicing and archiving initiatives in almost every Latin American country – Mexico, Brazil as market leaders



Allowed



E-invoicing: Trends and upcoming changes Africa

► Key considerations: ► Use of e-invoicing and archiving low

compared to rest of the world ► Paper invoicing remains dominant ► Less developed legal frameworks in place

(except for South Africa) ► If allowed, electronic invoicing and

archiving in Africa and the Middle East are complex



Allowed



Accounting system

Tax data

warehouse

Final thoughts The future

Single click of a button,

automated reporting at your

fingertips and global visibility

Single instance

ERP system

Global data warehousing capabilities


Analytics and

exception reporting

Multi jurisdictional

tax returns

EY | Assurance | Tax | Transactions | Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. © 2015 EYGM Limited. All Rights Reserved. EYG no. DL1424 This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. ey.com

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