Thomson Reuters Tax & Accounting - Indirect Tax Seminars

Thomson Reuters Tax & Accounting Indirect Tax SeminarsTechnology in Indirect Tax AutomationMarch 2013

AgendaINTRODUCTIONS AND SEMINAR OBJECTIVESINDIRECT TAX AUTOMATION –AN INTRODUCTIONLUNCHIN-DEPTH DISCUSSION AND TECHNOLOGY DEMONSTRATIONQ&A, WRAP-UP, CPE SURVEYSTAX & ACCOUNTING2

AgendaINTRODUCTIONS AND SEMINAR OBJECTIVESINDIRECT TAX AUTOMATION – AN INTRODUCTIONLUNCHIN-DEPTH DISCUSSION AND TECHNOLOGY DEMONSTRATIONQ&A, WRAP-UP, CPE SURVEYSTAX & ACCOUNTING3

PresentersPerry FalvoRegional Sales ManagerThomson Reuters Indirect Taxperry.falvo@thomsonreuters.com(469) 361-6883Tom FarmerBusiness ConsultantThomson Reuters Indirect Taxtom.farmer@thomsonreuters.com(972) 390-7606Loran PellegrinoSystems EngineerThomson Reuters Indirect Taxloran.pellegrino@thomsonreuters.com(770) 772-8157TAX & ACCOUNTING4

Seminar ObjectivesIndirect Tax AutomationAnswer these questions: What is indirect tax automation? Why should I be concerned about automation? What types of technology supports automated indirect taxprocessing? What types of automation technology can address my currentcorporate challenges?TAX & ACCOUNTING5

AgendaINTRODUCTIONS AND SEMINAR OBJECTIVESINDIRECT TAX AUTOMATION – AN INTRODUCTIONLUNCHIN-DEPTH DISCUSSION AND TECHNOLOGY DEMONSTRATIONQ&A, WRAP-UP, CPE SURVEYSTAX & ACCOUNTING6

Quantifying the PainThe High Cost of Transaction TaxIn the Global 2000, for every 1 billion intransactions, approximately 6M is wasted intransaction tax costs annually.Small-to-mid-sized businesses average more than 327K in annual costs to manage sales and usetax compliance.Source: Independent survey by Tallman Insights and fielded by Mindwave Research Manual tax processes Penalties and interest Errors in sales & use tax Diverted capital Errors in output/input VAT Heavy host systemcustomizations7

Challenges of A Typical Month Multiple Tasks to be Managed Completion of Returns RequiredEach Month – Perpetually Reliance on AP, AR, & ITMeet with StateAuditor onSamplingMethodNecessary to Complete Tasks Manual Review Required Forcomplex transactions SUTProfessionalPartial Data Residing withinMultiple SourcesLack of time & planning & analysisResearchProposalStructurew FinancePrepare PLRRequestPrepare &Review270 ReturnsTrain New APHires withUpdated MatrixDocumentPolicyChanges for ITTo Implementtools to be proactive8

Juggling Tasks – A Break Out of EffortMonthlyComplianceAudits &ControversiesFinancialReporting & ForecastingPlanning, Training& Management59%24%11%6%6%11%59%24%Financial Reporting & ForecastingAudits & ControversiesMonthly CompliancePlanning, Training & Management9

Areas of EffortMonthlyCompliance1. Data Collection2. Consolidation &Reconciliation3. ExceptionReview &ManualAdjustments4. Preparing TaxReturns5. PreparingPayments &AccountingEntriesAudit &Controversies1. Audit & IDRManagementFinancial Reporting& ForecastingPlanning, Training& Management1. Tax Reserves &Provisions1. M&A Planning2. Audit Data &DocumentRetrieval2. TransactionAnalysis & TaxCredit Studies3. Audit Research& Negotiation3. Sarbanes &Financial AuditReviews4. Refunds &Credits5. Audit Appeal &Controversy4. Reconciliation ofTax Accounts2. Training NonTax Personnel3. TransactionStructurePlanning4. Managing TaxPersonnel5. Non SUT Work:(Property Tax,BusinessLicense Tax &Excise Tax)10

Compliance - Opportunity CostTransactionsAre Your Processes Costing YouMore Than They Should?Penaltiesand InterestIT Costs Business Region responsible for taxsolution Ongoing Custom API Development Custom VAT SolutionDivertedCapitalManual Tax Processesand Tax Errors Audit Expense Tax Research Tax Table Maintenance Exemption Management Tax Rate Lookup/ Errors Tax Training11

Quick reviewTransaction TAX Types Sales Tax Use Tax Value Added Tax VAT, GST, HST, PST Special Taxes andTransaction Fees Battery fee PIF fee Bag fee Excise Tax Fuel Excise Medical Device Excise Tax Sin TaxesBusiness Processes Order to Cash (O2C, Sales, AR) Procure to Pay (P2P, Purchasing, AP)TAX & ACCOUNTING12

Quick QuizWhat is your definition of Indirect Tax Automation?Indirect Tax Compliance Reporting Macros in spreadsheets to collect and analyze data? Access database? Logging on to state websites to submit returns? Requiring the local locations to handle their own compliance soyou don’t have to worry about it? Educated guesswork? Pay someone else to do the work?TAX & ACCOUNTING13

Quick QuizWhat is your definition of Indirect Tax Automation?Corporate Reporting and Audit Defense Macros in spreadsheets to collect and analyze data? Access database? Calling IT on a regular basis to request reports from the ERPsystem? Hanging out in the tax conference room exploring boxes? Educated guesswork?TAX & ACCOUNTING14

Quick QuizWhat is your definition of Indirect Tax Automation?Front End Determination, Calculation, Recording Pay what the vendor charges? Review every invoice (or at least the big ones) for correctness? Hire Tax Professionals to be part of the AP/AR department? Provide “training manuals” to AP and AR so they can properlypick tax codes and/or taxability? Manually program the ERP with logic to handle the various taxlaws? Maintain tables and taxability matrices? Excel and Access? Pay someone else to do the work?TAX & ACCOUNTING15

Common ApproachesManual ProcessesSemi AutomaticProcesses Subjective anderror prone Still subjectiveand error prone Cost-intensivecustomization Time-consumingand expensive Still timeconsuming Difficult to keeptimely, up-to-date Little control overthe use of policies Hard to maintain Application- andplatformdependent Extremely difficultto scale,collectively Consumes TaxDepartment’s time Typically theresponsibility ofthe TaxDepartment tomaintainERP Applications Poor separation ofIT/Tax duties16

Evolution of Transaction Tax AutomationGlobal Tax SolutionTax CalculationEnginesAutomation WithERP Tax Tables andCodesManualCalculationTax Professional Control and VisibilityRespond and Manage ChangeCreate Complete Audit TrailsReduce the Cost of ComplianceIntegrate Seamlessly into the Business17

New Approach Using Automation1. Centralized Management of Tax Policy2. Centralized Management of Tax Processes and Data3. Ability for Tax Professional to Set Tax Policy4. Single Source Repository of Global Transaction Data5. Consolidated Business Reporting Mechanism6. Consolidated Audit Defense Support7. Consolidated Compliance Reporting Mechanism18

Key Requirements & Outcomes of True Automation1.Consistent Accuracy All tax policies, rates, rules & logic are enforced by a single tax application2.Consistent Control Tax professionals control all tax decisions3.Consistent Efficiency Single source of record for all transaction tax liabilities efficient monthlyfilings, reporting, analysis and audit support.4.IT Independence Tax professionals configure, manage and test tax requirements in the taxapplication vs. IT coding, programming and testing tax requirements.5.Business Process, People and Systems Independence Support automated transaction tax determination, calculation and recordingfor all Sales, Purchase & Post-Purchase transactions, and all businesssystems & applications.6.Consolidation Record historically rather than referentially all transaction and tax details in aconsolidated audit database.19

Indirect Tax Automation - Process and TechnologyExemption / Tax CertificateManagement SolutionSales, Billing, andTaxReportingReturnsFilingPurchasing SystemsEngineSolutionSolutionSolutionOrder To Cash ProcessProcure to Pay ProcessERP Systems,eCommerce Systems,Point of Sale,Legacy SystemsContent and Tax Research – Rates / Rules / FormsTAX DETERMINATIONTAX COMPLIANCETAX & ACCOUNTING20

ONESOURCE Tax Content – Legal CitationsTAX & ACCOUNTING21

Example of an automated business processVendor-billed Tax Verificationwith Automatic AccrualsInvoiceprocessed inERP SystemVendorchargedno taxTax engineAccruecorrect tax,pay as-isdeterminestaxVendortaxcorrect?YesMark invoiceas Shortpayvendor taxand accruecorrect taxAccruedifference,pay as-isYesMark invoiceas processedVendortax overchargedShortpay andaccruePartial payPay as-is andtrack

AgendaINTRODUCTIONS AND SEMINAR OBJECTIVESINDIRECT TAX AUTOMATION – AN INTRODUCTIONLUNCHIN-DEPTH DISCUSSION AND TECHNOLOGY DEMONSTRATIONQ&A, WRAP-UP, CPE SURVEYSTAX & ACCOUNTING23

AgendaINTRODUCTIONS AND SEMINAR OBJECTIVESINDIRECT TAX AUTOMATION – AN INTRODUCTIONLUNCHIN-DEPTH DISCUSSION AND TECHNOLOGY DEMONSTRATIONQ&A, WRAP-UP, CPE SURVEYSTAX & ACCOUNTING24

AUTOMATION - SUPPORTING THE END-TO-END PROCESSTaxAuditTax RequestTax ResultERP (Oracle, SAP,PeopleSoft, JDE),DeterminationGlobal ReportingReturnsFilingLegacy, eCommerce,Point of Sale, Homegrown appsTax Certs25

Types of TransactionsTransactionsDetermination Procure to Pay Purchase Requisition Purchase Order Quote AP InvoicingReportingCompliance Order to Cash Inquiry Quote Order Return Order AR Invoicing Goods/Inventory Movement26

What does this mean to ERP functional users?TransactionsDeterminationReportingCompliance Purchasing AP Order Entry AR27

Oracle PO/APExample Purchasing (PO/AP) Processusing Oracle eBusiness SuiteTAX & ACCOUNTING28

Oracle PO/APTAX & ACCOUNTING29

Oracle PO/APTAX & ACCOUNTING30

Oracle PO/APTAX & ACCOUNTING31

Oracle PO/APTAX & ACCOUNTING32

Oracle PO/APTAX & ACCOUNTING33

Oracle PO/APTAX & ACCOUNTING34

Oracle PO/APTAX & ACCOUNTING35

Oracle PO/APTAX & ACCOUNTING36

No Tax Charged on Invoice -AccrueTAX & ACCOUNTING37

Correct Tax Charged on Invoice –Pay As IsTAX & ACCOUNTING38

No Tax Charged on Invoice -AccrueTAX & ACCOUNTING39

Correct Tax Charged on Invoice –Pay As IsTAX & ACCOUNTING40

Vendor Overcharge Tax –Pay As IsTAX & ACCOUNTING41

Vendor Undercharge Tax –Pay As Is & AccrueTAX & ACCOUNTING42

ONESOURCE ACCRUAL ReportTAX & ACCOUNTING43

Oracle PO/APExample AR (Sales) Process using SAPTAX & ACCOUNTING44

SAP AR – Sales OrderTAX & ACCOUNTING45

SAP AR – Sales OrderTAX & ACCOUNTING46

SAP AR – Sales OrderTAX & ACCOUNTING47

SAP AR – Sales OrderTAX & ACCOUNTING48

SAP AR – Sales OrderTAX & ACCOUNTING49

SAP AR – Sales OrderTAX & ACCOUNTING50

SAP AR – Sales OrderTAX & ACCOUNTING51

SAP AR – Sales OrderTAX & ACCOUNTING52

SAP AR – Sales OrderTAX & ACCOUNTING53

SAP AR – Sales OrderTAX & ACCOUNTING54

SAP AR – Sales OrderTAX & ACCOUNTING55

SAP AR – Sales OrderTAX & ACCOUNTING56

SAP AR – Sales OrderTAX & ACCOUNTING57

SAP AR – Sales OrderTAX & ACCOUNTING58

SAP AR – Sales OrderTAX & ACCOUNTING59

SAP AR – Sales OrderTAX & ACCOUNTING60

SAP AR – Sales OrderTAX & ACCOUNTING61

SAP AR – Sales OrderTAX & ACCOUNTING62

SAP AR – Sales OrderTAX & ACCOUNTING63

TRANSACTION LIFECYCLEDetermine,Calculate, RecordBilling andTaxPurchasing SystemsEngineTAX DETERMINATIONReportingReturnsTAX COMPLIANCEFiling

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Automation of Tax Content Updates

DEMONSTRATING THE ENGINE / WORKBENCHTax DepartmentBusinessSystem1-TransactionData Elements2-Tax“Workbench”AuditDatabase“The Workbench allows us to simulate businessscenarios – as if we are connected with a live ERPsystem”77

TRANSACTION LIFECYCLETax CertificateManagementBilling andTaxPurchasing SystemsEngineTAX DETERMINATIONReportingReturnsTAX COMPLIANCEFiling

TAX CERTIFICATE LIFECYCLECertificate ReceivedCertificate ReviewedTax Calc. w/Cert DataReports RunImage ScannedCert. Data InputResults StoredStatus ReviewedUpdate Requests Made79

Tax Certificate Management - Search

Tax Certificate Management - Reports

Tax Certificate Management – Mail Notification

TRANSACTION LIFECYCLEReconciliationReportingTaxBilling andEngineBusinessTAX DETERMINATIONAnalysis &AuditReportingReportingReturnsPurchasing SystemsTAX COMPLIANCEFiling

ReportingTransactionsDetermination Localized Reports USA Canada VATReportingCompliance Daily, Monthly, Qrty Reports Audits ERP GL Reconciliation Reports No IT Involvement Ad Hoc Reporting Configuration Reports Save Report Definitions84

Business Analysis Reporting

Audit Defense