PowerPoint Presentation · – Poses both risk and control questions, allowing companies to consider both risk and controls when evaluating which sites or topics warrant more focused

A roadmap to indirect tax function effectiveness

March 2014

T +31 20 658 6344 E [email protected] I www.key-group.nl

What do we need and already have?

• Understanding the business - We use questionnaires and will conduct interviews to

obtain an understanding of the business and key processes related to VAT

• Assessment - KEY Group evaluates the effectiveness of control framework and

provide solution overview using its toolkit including the normative VAT Control

Framework as a yardstick for comparison purposes

• Our toolkit:

– Indirect Tax Maturity Scan

– VAT Function Framework Questionnaire

– Process Objective Matrix

– Normative VAT Control Framework

– Online questionnaires that can be tailored for selective audience (scalable, worldwide

operations or for specific function only) to assess:

• Strategy Risks

• Financial Risks

• Operational Risks

• Compliance Risks

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When is the right time?

• Realize business objectives, e.g. cost reduction in an efficient and effective manner

• Change in personnel or management structure such as appointment of new functions

of CFO, Head of Tax, Indirect Tax leader

• Performance review of indirect tax function

– To ascertain proper implementation and impact of changes in business, laws and regulations

on implemented tax planning

– Right tax competencies available?

– Enough skilled tax personnel available

• Root cause analysis of unanticipated audit challenges/assessments and remediation

• Optimize relationship with tax authorities based on executing company’s tax policies

• Determine whether sufficient budget is available to realize aims considering the tasks

and responsibilities assigned to our tax department

– Writing a business case, problem statement and calculate Return on Investment

opportunities

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Detailed work plan realizing your aim

• Interviews and provide questionnaires and matrices

• Review strategy, objectives and initiatives

• Review indirect tax department level of internal control

• Review of how company currently assesses and manages indirect tax risks and

develop risk assessment criteria

• Review indirect tax policies

• Deliverables:

– Process Objective Matrix

– Final VAT Risk Universe

– Process flows

– Indirect tax risk & control matrix

– Preliminary improvement plan

– Final Tax Control Framework documentation

– Final Improvement plan and roll out timelines

– Indirect Tax Strategic Plan

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Indirect Tax Maturity Scan - Areas of Investigation

• Aim: assess the maturity of the indirect tax department (as is)

– Overall functioning

– People

– Infrastructure

– Operations

– Indirect Tax Risk Management

• Next: an example of our ‘Infrastructure’ exercise

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Example of Indirect Tax Maturity Scan - Infrastructure

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VAT Function Framework - Our Areas of Investigation

• Aim: assess the business's current state (leading practice benchmarks, identify

gaps in performance, identify success factors)

– Governance – Purpose

– People and Skills - Acquisition, Development, Career Planning, Infrastructure -

Documentation, Tools and Technology, Knowledge Management

– Operations - Operations, Development and Support, Control Framework, Organization

– Tax Risk Assessment

• Next: snapshot example of questions we raise based on the above

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Example of VAT Function Framework Questionnaire

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Indirect Tax Maturity Scan - Our Areas of Investigation

• Aim: assess Indirect Tax Department Strategies and Objectives

– Indirect Tax Management and Reporting

– Indirect Tax Planning

– Indirect Tax Advice and support to business units

– Indirect Tax Accounting and Reporting

– Indirect Tax Compliance

– Representation and Communication

– Policies and Standards

– Subsidies

• Next: a snapshot of our ‘Tax Management and Reporting’ exercise

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Example of Process Objective Matrix

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Normative VAT Control Framework

• Aim: perform a GAP analysis via Golden Standard as yardstick

– Our normative VAT Control Framework is the start point

– The actual situation ‘as is’ is measured against this yardstick

– Resulting in a summary of the differences

– Associated risks may lead to acceptance or to proposals for improvement

• Next: a snapshot of a part of our ‘Normative VAT Control Framework: “Cross

border EU transactions”

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Example of Normative VAT Control Framework

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Example Indirect Tax Risk Universe - Strategy Risks

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Time is money - realize low impact on your resources

• Our questionnaires:

– Data obtained from company personnel through online survey or via paper

– Can be completed by a respondent in limited amount of time, at any time of their

choosing allowing them to respond without business disruption

– Deployed quickly to worldwide operations on a simultaneous basis, shaving months off

more traditional risk assessment

– Is scalable; you can review as many or as few locations as you like

– Poses both risk and control questions, allowing companies to consider both risk and

controls when evaluating which sites or topics warrant more focused review

– Allows comparison between sites, between businesses, or across countries, and by topic,

providing guidance on where to deploy risk management resources

• Next: a snapshot of format and questions we raise depending on the audience

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Example Indirect Tax Risk Universe - Financial Risks

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Example Indirect Tax Risk Universe - Operational Risks

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Example Indirect Tax Risk Universe - Compliance Risks

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Documents

PowerPoint Presentation · – Poses both risk and control questions, allowing companies to consider both risk and controls when evaluating which sites or topics warrant more focused