Analyze the past, predict the future and redefine yourself

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There’s a building in the Cayman Islands that houses supposedly 12,000 U.S.-based corporations. That’s either the biggest building in the world or the biggest tax scam in the world, and we know which one it is - Barack Obama

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Apple’s, Google's and Coca Cola’s tax assessments are material from an annual report perspective besides financial risks contain reputational risks.

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• Italian tax police believe Google evaded 227 million euros in taxes.
• Apple has agreed to pay €318m (£235m, $348m) to Italian tax authorities following a two-year fraud investigation, according to reports.
• Google agreed to pay the UK treasurer £130 million ($185 million) in back taxes, covering the period since 2005, and to also pay higher taxes in the future.
• France is seeking 1.6 billion euros ($1.76 billion) in back taxes from U.S. Internet giant Google.

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Let's discuss the past, impact and what to do ...

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Awareness and acceptance by senior management

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Demonstrate reasons for change in a language that Finance understands

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The deck in the first link shows a conceptual roadmap that could be used as guideline. As organization structures or maturity levels are not the same, the startpoint could for every company be different. Important from a business and finance perspective is that the financial reports are read and studied and when available investors calls that you listen in and analyze to get a grip of the company compliance statements, business objectives & strategy and short and long term forecasting, etc. Those are the sales arguments for change you need.

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Based on that define the areas where indirect tax (or TP) has the biggest impact and lowest performing process or technology.

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This is further explained in 'Achieving stakeholder satisfaction' and 'Writing a business case, problem statement and calculate Return on Investment'.

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Tax revenue in 2015 (EU and NL)

More than 160 countries have a VAT regime. In the EU, between 2008 and 2013, the average EU standard rate increased from around 19.5% to more than 21%. The EU average VAT rate is now approximately 21.5%. VAT accounts for more than 20% of total tax revenue (source: OECD).

Netherlands: Tax revenue in 2015
Indirect tax revenue in NL was in 2015 EUR 74,9bn compared to Corporate Income Tax EUR 21,3bn. Wage tax and income tax was EUR 133,7bn.

Taxation in the EU The infographic below shows the income from direct and indirect taxes for each member state as well as total tax revenue as a percentage of the gross domestic product. The latter is divided between taxes on capital, consumption and labour. In addition this map shows how wealthy countries are.  

Read more detail

• Why is management necessary and what needs to be done?
• EU - Overview of the European Parliament's initiatives on taxation

Benchmark info, templates and approaches for process improvements and meeting objectives

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Our aim is to share our expertise with you through this website, to create and share current state benchmarking knowledge, to inspire and also challenge your department functions through offering modules that can be used to scope process gaps from an Indirect Tax and Transfer Pricing perspective.

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You can enter either via: 'Where you are and where you want to go'. A 'Table of Contents' pops up, click on 'to read' and select the chapter you like to visit by clicking again.

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The chapter 'Roadmap to Indirect Tax function Effectiveness' is a executive summary and contains a section how to get internal buy-in and write a problem statement and business case. 'Structure the Tax function' is my view and personal story.

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'Data and technology' is an interesting read as the weaknesses of SAP VAT are explained in detail. 'Tax Transparency' gives you an overview of tax trends and correlation with TP. Of course the chapters 'VAT Control Framework', 'Indirect tax Risk Management' and an 'Indirect tax Strategic Plan' are discussed.

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And a lot more ...

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GITM - Tables of contents PDF

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