Headline Verdana BoldDeloitte TaxMax – The 43rd seriesOne bold step in the right directionRichard Mackender & Senthuran Elalingam l 22 November 2017by Deloitte Tax Academy
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Agenda
The Digital Economy 3
Background and market research 8
Managing tax challenges usingtechnology 13
Leveraging emerging technology 20
The journey 25
Q&A 27
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The digital economy
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Development
The digital economy
4
1
23
5
The spread of ICT across (traditional and innovative) businesssectors
Business models have changed and are changing
Accelerated and changed the spread ofglobal value chains
A result of transformative process brought byinformation and communication technology (ICT)
Increasingly becomingthe economy itself
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New and dynamic business models
The digital economy
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Digital economy: direct tax issues
Incomecharacterisation
Profitallocation
Taxablenexus
• Remote supplies ofgoods and services
• PE / source
• Novel approaches
• Technologicaldevelopments
• Royalty vs. service
• Withholding taxes
• High valueintangibles
• R&D
• Transfer pricing:DEMPE* functionsand risk assumption
* DEMPE - development, enhancement, maintenance, protection and exploitation of intangibles
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Global VAT / GST developments
Digital economy: VAT issues
BEPSAction plan
15 Actions
VAT / GSTguidelines
OECDWorkingParty 9
B2B B2C
Endorsed byGlobal Forumon VAT on 18
April 2014
Endorsed byGlobal Forum
on VAT on6 November
2015
Action 1:digital
economy
Includesrecommendations
to implementprinciples from
VAT / GSTguidelines
Final BEPSpackageendorsedby OECD /
G20 inOctober
2015
Finalinternationalguidelines
published byOECD on 12April 2017
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Background and marketresearch
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The evolving tax landscape
Driving change in the tax function
Technologyand
resource
Economicevents
Newlegislation
Taxauthorityapproach
Taxenvironment
Businessglobalisation –more obligations,greater economiesof scale
Responsible tax –more stakeholdersand scrutiny
Increasedlegislation – morerules, complexity
Tax authoritytransformation –using andsharing data
Technology –new risksandopportunities
Resource –new skillsrequired
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Market research
Views from the Head of Tax
34% 34% 33% 34%
16%
42% 43%36% 37%
26%
58% 55%50%
58%
45%
0%
20%
40%
60%
Maximisingquality
Guaranteeingcontrol
Ability to addvalue
Managingcosts
Processefficiency
2016
2014
2012
40%
57%
38%
40%
56%
40%52%
41%54%
28%
53%45%
38%
63%
0%
20%
40%
60%
80%
Quality Control Ability to addvalue
Cost Process efficiency
Decentrliased functions
Coordinated functions
Centralised functions
• Satisfactionlevels are at anall time low
• Particularly interms ofprocessefficiency
• Tax functions feelhappy with levelsof quality
• Control andprocess efficiencyare areas offocus
% of respondents “satisfied” with current state
Anticipated importance of drivers over next three years
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Market research
The potential of technology
Source: Deloitte Global Market Research, 2016
High current benefit
Many businesses see highpotential benefits usingtechnology in different areas oftax.
……but few are actuallyrealising those benefits
High potential benefit
66%64%
40%
32%
Processefficiency
Quality andaccuracy of data
Riskmanagement
Planning andbusiness
decision making
20%22%
14%12%
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Tax technology today
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Managing tax challengesusing technology
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Example tax technology considerations
Challenges Characteristics ofenabling technology
Significant
volume of
data
Regular,
time
consuming
processes
Errors from
manual
manipulation
Tax
authority
focus on
data quality
Reliance
on non-tax
personnel
Visibility
over global
compliance
ERP
sensitisation
Process
automation
Audit trail
Workflow
Document
management
Data
validation
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Example tax technology considerations
A global tax platform,providing…
Deadline, process and
documentation in one place
Maintained global tax
deadline content across
multiple regimes
Global dashboard reporting
Data aggregated for quick
access to everything you
need
Standard process workflows
myInsight
Dashboards
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Example tax technology considerations
• Deloitte Indirect Tax SMARTsupports the end-to-endstandardised indirect taxcompliance
• Uploads and consolidatesdata
• Data cleansing through Pre-Agreed Adjustments (PAA)
• Data quality checks (DQC)and exception reports
• Return generation andsubmission
• Full audit trail
• Management reportingbased upon structuredtransactional data
Indirect Tax SMART
GST analytics
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Example tax technology considerations
Risk assessment on CbCR datato be provided to taxauthorities, including analysissuch as:
• Effective Tax Rate (ETR)and Cash ETR
• Percent of related revenuesto total revenue
• Number of employeesversus:
• Unrelated partyrevenues
• Profit before tax
• Stated capital
• Tangible assets
Country-by-country DigitaleXchange (CDX)
CbCR analytics
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Example tax technology considerations
Business Traveller
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Tax technology architecture
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Leveraging emergingtechnology
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Emerging technologies
Emergingtechnologies
Roboticprocess
automation
Cognitivecomputing
Cyber &data
privacy
Big data
AI
Blockchain
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Robotics in tax video
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Robotics in tax examples
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Tax work will be reconfigured
• Routinised
• Decomposed
• Disintermediated
Resource models will change
• Far-shoring?
• Online collaboration
• Crowd
Implications for the tax operating model
New types of people will be needed
• Para-professionals
• Process engineers
• Systems designers
• Data scientists
Focus of the tax function will be
redirected
• Business partner
• Proactive not reactive
• Effective and efficient
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The journey
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Where should you start?
Have a tax technology
plan
Layout a roadmap
Allocate responsibility fordelivery
Agree to it and securebudget
Create a tax technologyvision
Map the current state
Consider what is possible
Develop a desiredarchitecture
Reassess the taxoperatingmodel
Review the process design
Reconsider the resourcingmodel
Refine the governanceframework
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Q&A
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