Determine the exact amount of risk or saving

In this newsletter we will highlight one of the methods for zero measurement of tax risks: 'statistical sampling' to exactly determine the amount of risk or saving. Why is the exact amount important? We will illustrate this using a due diligence investigation as an example. Such investigation not only serves the purpose of identifying the material risks, but also the quantification of these risks is essential. A traditional due diligence investigation normally involves completion of standard questionnaires and retrieval of standard information, which is provided by the vendor via a specially designed data room. When for example possible incorrect VAT determination is detected, a rough estimate of the magnitude of the VAT risks (or savings!) is made on the basis of turnover and sales figures. This is not ideal for both vendor and purchaser, as it involves a lot of guesswork and thus usually provides an insufficient framework in price negotiations. The question is whether there is a more accurate method  for determining the potential additional tax assessment (or saving!) in an efficient and effective way. In order to quickly gain insight into the level of tax risks (i.e. calculation of the potential assessment), statistical sampling can be used. By selecting a few elements (euros), the reliability of the composition of tax items can be determined with a high degree of certainty, and on the basis of identified errors in the sample, the exact amount of additional tax assessment can be calculated. Supportive to the strength of this method is the fact that statistical sampling is the preferred tax audit method used by the Dutch tax authorities in their tax audits. This method is explicitly approved by the highest Dutch court. Defining the scope, designing, drawing the sample and evaluating the results requires a multidisciplinary approach. In addition to indirect tax knowledge, expertise in statistical sampling is required. In case of a due diligence such a sample is not solely relevant for the purchaser. Also the selling party can benefit from sampling with regard to preparatory work for a prospective takeover. When a statistical sample is drawn and the results are acceptable, the conclusions can be proactively taken into the data room. This can serve as additional evidence of implementation and maintenance of an effective (tax) control framework. Moreover, in the Netherlands the possibility exists to align and discuss the results of the observed findings with the tax authorities, which provides more certainty regarding the adopted tax position. All this can positively contribute to the sales negotiations, including the amount of guarantees and/or discounts that are to be provided. Via the 'single audit' method, it is possible to extend the scope from VAT and/or GST to other tax areas such as 'corporate income tax' and 'wage tax'. Click on 'Go to Flyer' below if you want to learn more about 'zero measurement of risks and savings' or select 'single audit' method for debrief. Materiality of tax risks Go To Flyer Go to 'Single Audit method' +1 Tweet Forward Copyright 2015 Global Indirect Tax Management, All rights reserved. This e-mail contains benchmark information useful for self assessments Our mailing address is: Global Indirect Tax Management Attn of: Phenix Consulting Beech Avenue 54-80 Schiphol-Rijk, 1119 PW Netherlands unsubscribe from this list    update subscription preferences Phenix Consulting · Beech Avenue 54-80 · Schiphol-Rijk ·  1119 PW · Netherlands

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VAT Control Framework

Global Indirect Tax Management shows the area where risk based controls are to be expected and in addition shares templates and methods for self assessments purposes. In this edition we like to highlight a company's "VAT Control Framework" A Tax Control Framework (TCF) is an internal control instrument specifically aimed at the tax function within a company and an integral component of a company’s business control framework, which is different for every organization. It is a system (process) to identify, mitigate, control and report tax risks. The ultimate objective of a TCF is to be in compliance with tax laws and reporting requirements and manage the risks that exceed the companies' risk appetite. A TCF should prevent tax errors, identify opportunities in a timely manner and perform correct filings at the right moment. A company's VAT control framework system is adequate if it provides insight into where material VAT risks may arise in the company (awareness), while the degree of risk tolerance is established internally and where appropriate control measures are taken with respect to these risks. Below video will provide further details about an effective setup of such a controls framework and the importance of aligned to the company's business framework. The pictorial overview shown first, provide the key definitions. We hope you appreciate our initiative. GITM is continuously updated via input of the reader's community all over the world.  Your feedback, is therefore welcomed. Kind regards, Richard Cornelisse Editorial Board Mobile: +31 6 5399 4874 E-mail:  richard.cornelisse@globalindirecttaxmanagement.com Normative VAT Control Framework GoTo GITM website +1 Tweet Forward Copyright 2015 Global Indirect Tax Management, All rights reserved. This e-mail contains benchmark information useful for self assessments Our mailing address is: Global Indirect Tax Management Attn of: Phenix Consulting Beech Avenue 54-80 Schiphol-Rijk, 1119 PW Netherlands unsubscribe from this list    update subscription preferences Phenix Consulting · Beech Avenue 54-80 · Schiphol-Rijk ·  1119 PW · Netherlands

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Phenix Consulting BV

Phenix Consulting, a joint venture between LiNKiT Consulting and the KEY Group, specializes in the delivery of a range of SAP consultancy and implementation services from a tax, financial and control perspective.

Background

Phenix Consulting comprises 6 partners and a team of 30 consultants all with strong, international business experience across a variety of SAP environments. The strength of Phenix Consulting is built on bringing together two businesses with different - but complementary - strengths to provide integrated business solutions for clients.

The KEY Group’s strengths lie where business control, information technology and tax come together, whereas LiNKiT Consulting has particular expertise in finance and control - specifically in business consulting, SAP implementation and the development of innovative business and software solutions.

The establishment of Phenix Consulting strengthens our position in the SAP consultancy marketplace. All of our clients benefit from the synergies realized by LiNKiT and KEY Group working together – more so than either company could provide individually.

These synergies result from our ability to exploit economies of scale, focus resources & expertise and with a critical mass that supports broader geographic delivery.

The combined resources of the two companies allow us to deploy not just experienced, talented consultants but also draw on our intellectual property & copyrights, and the strong leadership skills from both the LiNKiT and KEY Group leadership teams.

Phenix Consulting continually strives to develop innovative SAP products and broaden our product lines. Examples of our innovative products include:

1. eBilanz Cockpit - This is a solution for the mandatory filing of the German e-tax balance and has now been successfully implemented at 60 medium-sized and multinational companies.
2. SAF-T Filing – Across the globe many multinational companies are facing challenges in complying with the mandatory SAF-T filing requirements. SAF-T is the OECD's Standard Audit File for Tax Purposes that is being adopted as common practice for tax administrations and will be the basis for IT-based audit tools to help to combat fraud and tax evasion. We developed a lean and flexible solution which extracts relevant data directly from SAP systems and transforms the data into the XML format in compliance with the legal requirements.
3. eBilanz Cockpit and SAF-T integration - With access to the full capabilities of the eBilanz Cockpit we are currently developing a SAF-T cockpit which will be fully integrated with SAP. It includes individual templates that satisfy the data and format requirements of each country and provides an analytical reporting library to support monitoring controls for finance and tax. This will subsequently be the basis for development of an ERP independent solution.