An increasing number of Tax-related obligations require that groups file and disclose more information than ever before. Many countries have adopted the OECD’s BEPS Initiative to increase corporate tax transparency. These initiatives increase the tax functions’ burden to compile and track data at a high level and make it available for Tax and other authorities. We at Amphitrite Advisory, we believe the only way to help our clients is to understand their Tax data management using power query, gaps, expectations, and thoughts. The ideal client for us is one that is dedicated to being the best by leading in everything they do and operating at their peak. When you’re success, we’re in purpose!
We are seeing an increase in local and regional initiatives, in addition to the global imperatives. The EU has made mandatory disclosure available and proposed making BEPS Country-by-Country reporting (“CbC”), BEPS Action 13, publicly accessible. Some countries, such as China, will require groups of information to file information, including information on related party transactions and information about equity investments, in their CbC reporting. This is in advance of many countries’ global CbC reporting deadlines.
To manage Tax risk, the Tax function needs additional information. This data is not usually found in the group’s accounting system or collected in financial reporting processes. There are many types of information that are required for different purposes and groups. We have discussed this with clients.
- The legal entity structure, which includes permanent establishments
- Information about what activities are being performed and where.
- Relevant tax figures to analyze the Tax and Compliance situation
- Documentation and information about specific transactions, internal and externe
- Additional documents, both legal and tax, such as service-level agreement agreements
- Historical and current information about Tax risks
- Information about significant events within the group
- Information about cross-border transactions
- Information about tax compliance obligations by group members
- We will be discussing some important topics when you implement a solution.
- The basic features of a solution
It is important to consider the legal and organizational structure of the group, as well as the people responsible for handling the data and performing the related tasks when implementing processes to collect the mentioned types of data.
These are the basic features that should be included in a system solution:
- Administration and general data
- This solution will ensure that all necessary entity data is available, including the legal and operational structures, as well as historical changes.
- It should collect and store all required data
- It will help you to assign roles and responsibilities to different Tax areas (and other functions).
- Principal Tax Areas
- It should be able to support various processes in different tax areas of concern
- It should facilitate the collection of data and documents relevant to these processes.
- It should allow for the analysis of the data and the creation of the required Tax reports
The platform should be flexible enough to meet current and future needs and processes, and give control to the Tax function over its data.
Principal Tax Areas
It is possible to determine which Tax areas will be the focus of group Tax functions by using firm reporting processes for entity information and a flexible structure to add reporters and allocate users to different tasks. We have highlighted some areas that could be helped by our solution. However, there are many others.
Analyzing tax figures
Many groups don’t have the ability to gather all the relevant Tax figures the Tax function needs to complete its analysis. Accounting systems and Tax reporting processes don’t always include local GAAP numbers, which is often required to perform a country and company analysis. Sometimes, data required by the Tax function to conduct an analysis may be limited to local and legal entities. This makes it unsuitable to include in financial reporting processes. A system solution should allow for the creation of a separate process to collect certain Tax figures.