Richard Cornelisse

Author Archive

M&A Integration and Indirect Tax: managing the moving parts before, during, and after a transaction

In Business Strategy, Indirect Tax Strategic Plan, Processes and Controls on 16/04/2015 at 4:41 pm

The aim is to provide insight into these risks and build into the contract adequate coverage in case risk history repeated itself. Armed with this information, the buyer can negotiate a reduction of the selling price or secure indemnification from the identified risk.

Although fundamental tax due diligence is still a requirement for the purchase of a company or assets, it is only the opening chapter.

Equally important are exploring and thinking through options for structuring the indirect tax profile and how it will function in the organization post acquisition and throughout implementation and integration.

Note that the webcast has subtitles in English.

Richard H. Cornelisse

Webcast the Intersection of VAT and Shared Service Centers

In Indirect Tax Strategic Plan on 12/04/2015 at 9:51 am

Many companies look for ways to improve processes, manage costs, increase functionality and customer satisfaction,  and extract additional value.

One approach that is growing in popularity is the migration to a shared service center model. As varied as the drivers for and uses of such a model may be, there is one common denominator that is too often missing from the strategic or planning elements of the shared service discussion — indirect tax. And although these tax considerations may not be among the issues that drive a shared service decision, tax can certainly give rise to some significant and costly challenges. That is particularly true of value added tax.

Note that the webcast has subtitles in English.

Richard H. Cornelisse

Webcast about realizing indirect tax objectives

In Indirect Tax Strategic Plan on 27/03/2015 at 11:11 pm

In this webcast, based on slides that we normally use during our workshops, we show how the company’s business control framework could bring the right VAT message across to senior management.

This might facilitate in obtaining extra indirect tax resources and budget but also in an upgrade of roles and responsibilities. The final outcome will be that the different stakeholders work together on issues that exceed the company’s risk appetite and that risk based VAT controls are implemented, aligned with the company’s business control framework.

Workforce efficiency is achieved as company’s resources do no longer spend time on further reducing indirect tax risks that are already at an acceptable level.

This way of communication we explain in the webcast will support business cases for future investments.

Note that the webcast has subtitles in English.

Richard H. Cornelisse

VAT Cross Border Rulings (CBR) – European commission

In Indirect Tax Strategic Plan on 27/03/2015 at 9:56 pm

What is it?

A pilot project has been set up to allow taxable persons to obtain advance rulings on the VAT treatment of complex cross-border transactions.

This project has started in June 2013 and is now scheduled to continue till 30 September 2018.

Several Member States are participating in this project, set up by the EU VAT Forum.

Taxable persons planning cross-border transactions between two or more of the participating Member States can ask for such a ruling with regard to the VAT treatment of the transactions they envisage.

Which Member States participate and how to ask for such a ruling?

More detailed information regarding the Member States currently participating, the conditions and the procedure can be found in the information notice.

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More information on Cross Border Rulings

The current list of cross-border rulings is available on line.

VAT Cross Border Rulings (CBR) – EU Pilot project

Realize sponsorship for change

In Indirect Tax Strategic Plan on 17/03/2015 at 7:41 pm

Assume that a Tax Function of a company should work under the same market principles as tax advisers and that the in-house customers are the executive management, finance, procurement, IT, logistics, internal audit, HR, legal etc.

Customer satisfaction is achieved by managing the expectations and relationships of internal customers, tax authorities, external auditors and other stakeholders.

The first is to determine the requirements of client satisfaction of senior management (C-level). Based on the above it seems that C-level executives consider indirect tax of lower priority than the indirect tax function generally does. Is the root cause misinterpretation or not understanding and speaking the same language?

The next step – to achieve mutual understanding – is to get agreement with senior management at the level of indirect tax risk appetite of the company in the worst-case scenario.

If you know the risk appetite, you have to identify the lowest performing indirect tax processes that have the most direct impact on the company’s business objectives (e.g. benchmark and measure). Short problem statements for the gaps found should be written. They should include an estimate of savings or the amount of hours currently lost due to rework.

Identify a problem, measure its magnitude, determine why the problem exists, and generates a set of solutions to ensure that the problem goes away.

These statements can subsequently be prioritized and validated with top management. Various solutions are presented with cost-benefit analysis, so a constructive discussion with top management can be held about what is needed to close these gaps (e.g. budget and/or resources needed or necessary for change of systems, processes and controls etc.).

In the worst case the gap(s) will not be closed, but at least you have achieved mutual awareness and hopefully responsibility. However, if the problem is material and addressed in the right way it will more than likely be dealt with accordingly, because it has now become a mutual responsibility.

Richard H. Cornelisse

Read more at Global Indirect Tax Management: a roadmap for indirect tax function effectiveness

Are the right tax competencies available?

In Business Strategy, Indirect Tax Strategic Plan on 15/03/2015 at 5:33 pm

For large companies, it is often not a question of the right skills, but more whether those skilled team members are sufficiently focused and whether they have the time and information needed to plan effectively. More often than not, tax functions spend their time on necessary compliance and reporting matters, or collecting and reworking the information needed for planning and forecasting.

The indirect tax department needs to consist of the right number of tax personnel and the right level of skills and capabilities to be successful.

4_benchmark

  • Are the right tax competencies available?
  • Is enough skilled tax personnel available?
  • Is training and specialization available?
  • Is there access to external expertise in a timely manner?
  • How is attracting and retaining experienced indirect team managed?
  • Is there sufficient budget available to realize objectives, considering the tasks and responsibilities assigned to our tax department?

3_Performance_assessment

via Global Indirect Tax Management: How to realize objectives via practice approaches, tools + methodology.

Puerto Rico leader pushes for value-added tax amid scrutiny from public, credit rating agency

In General, Macroeconomic effects of VAT on 15/03/2015 at 3:15 pm

SAN JUAN, PUERTO RICO –  Puerto Rico’s governor on Friday defended his proposal to create a 16 percent value-added tax as pressure built on the government to fix its finances.

Gov. Alejandro Garcia Padilla held a round table discussion with other officials to stress that the tax is needed to help the U.S. territory emerge from an eight-year recession and pay off $73 billion in public debt.

The meeting was held just hours after Standard & Poor’s lowered its rating on Puerto Rico’s general obligation bonds, warning that the government might not be able to honor its debt and fund public services.

Garcia dismissed those concerns and said that creating a value-added tax as part of a larger tax reform would generate an estimated $1.5 billion.

“This would guarantee the government’s ability to pay its future expenses and previous debts with recurring funds,” he said.

Standard & Poor’s disagreed, saying the value-added tax could have negative consequences because the government has struggled to collect tax revenues in the past. It noted that the current 7 percent sales tax has not generated the anticipated revenues or reduced tax evasion.

“Puerto Rico’s focus more recently has turned to new rounds of financing to simply maintain critical levels of operating cash, while paying a steep price for acquiring new financing. All of this poses a threat, in our view, to the commonwealth’s ability to continue providing basic governmental services,” the agency said.

The downgrade comes as Puerto Rico considers a $2 billion bond sale to raise more money. But it is unlikely investors will be swayed by the report, said David Tawil, co-founder and portfolio manager of New York-based Maglan Capital, which follows distressed companies.

“The hedge funds that are currently the largest investors and the municipal bond funds that have stuck with their investment in Puerto Rico are not at this point making their decisions on the basis of S&P… or Moody’s or Fitch’s for that matter,” he said by phone.

All three agencies downgraded Puerto Rico’s debt to junk last year.

Public hearings will begin soon on the proposed value-added tax, which would not apply to items including petroleum, prescription medication and certain foods.

The tax is part of legislation that also calls for income tax breaks, with income tax not applied to the first $40,000 earned by individuals or $80,000 for a couple. If approved, some 835,000 people would not pay any income tax.

via Puerto Rico leader pushes for value-added tax amid scrutiny from public, credit rating agency | Fox Business.

HMRC Penalties: a discussion document

In EU development, Indirect Tax Strategic Plan on 08/02/2015 at 9:05 am

As HMRC reviews and improves how we serve our customers, we are also exploring the way that we currently apply penalties when people fail to meet their tax or entitlement obligations.

We know that the vast majority of customers meet their obligations in full and on time, and that penalties are only applied to a small minority of people and businesses.

We want to make sure our approach works as well as possible. This is why we want to consider whether we could better differentiate between deliberate and persistent non-compliers and those who might make an occasional error for whom alternative interventions are more appropriate.

A modern tax system

  1. We aim to be an effective, efficient and impartial tax and payments authority. We help the honest majority to get their tax right and make it hard for the dishonest minority to cheat the system.
  2. Part of helping the honest majority involves delivering on the Government’s commitment to make the UK tax system as user-friendly and efficient as possible, which also means making tax policy simpler and easier for people to understand.
  3. To do this, we are improving how we work, introducing new digital services that make it easier for customers to get things right first time. We will put customers at the heart of everything we do by moving away from services that are based around traditional tax regimes to services designed around our customers.

Digital services

Our digital plans will transform the way we operate and serve our customers. One example of how we plan to do this involves a personalised tax account for customers, so we can help make it simpler, quicker and easier for them to pay the right tax at the right time.

Our digital services for our customers will:

  • be easy to use, convenient and personalised for individuals, businesses and
  • agents
  • promote digital take-up and voluntary compliance by designing for customer needs
  • use data to help customers avoid errors through pre-population
  • provide assistance in using or accessing our services for those who need it
  • allow us to consult our customers on policy proposals and changes so that we can improve them.

Compliance

Improving our services means changing the way we think about compliance.

New technology will enable us to deal with the vast majority of compliant customers – and those who try and bend or break the rules – by using more accurate, up-to-date data that gives us a more ‘real time’ view of a customer’s tax and benefits affairs.

By introducing services that make it easy for customers to get things right, we will reduce the risk of errors – saving them and us time and money.

Our digital services will also give us access to more and better data about our customers, which will enhance further our compliance activities.

We will be able to look at a customer record across all our tax regimes and previous tax periods, providing us with an insight into whether that individual or business poses a tax risk.

This more targeted approach means we can then focus our compliance activity and expertise on those determined to bend or break the rules.

Penalties

Penalties are applied to encourage taxpayers to comply with their obligations, to act as a sanction for those who don’t and to reassure the compliant majority that they will not be disadvantaged by those who don’t play by the rules. We don’t use penalties as a way of raising revenue, or to offset our running costs. In essence, we want compliance, not penalties.

Aim of this discussion

It’s important that we design tax policy for a modern, digital world and make the most of the opportunities this technology provides. As we change the way in which we operate, we believe we will need to change the way in which we apply penalties.

This discussion document looks at how we might be able to do this. We want feedback from individuals and businesses so it can influence our thinking at this early stage.

Schermafbeelding 2015-02-08 om 08.53.49Access document

Publication date: 2 February 2015 Closing date for comments: 11 May 2015

SAOG – Senior Accounting Officer Guidance (UK)

In Audit Defense on 25/01/2015 at 10:59 pm
  • SAOG01000 Introduction
  • SAOG05000 How to use this guidance
  • SAOG10000 About Senior Accounting Officer provisions
  • SAOG11000 What is a qualifying company
  • SAOG12000 Who is a Senior Accounting Officer
  • SAOG13000 Notifying Senior Accounting Officer details to HMRC
  • SAOG14000 Senior Accounting Officer Main Duty
  • SAOG15000 Senior Accounting Officer must provide a certificate to HMRC
  • SAOG16000 Tax Compliance risk management process
  • SAOG18000 In what circumstances is a penalty chargeable
  • SAOG19000 What to do when you think a penalty may be chargeable
  • SAOG20000 Reasonable excuse
  • SAOG21000 Assessing the penalty
  • SAOG22000 Appeals
  • SAOG23000 Other matters
  • SAOG24000 Glossary

SAOG – Senior Accounting Officer Guidance (UK)

Indirect Tax Management

In Indirect Tax Automation, Indirect Tax Strategic Plan, Processes and Controls on 23/01/2015 at 11:40 pm

‘Why’, ‘What’, and ‘How’ of Managing an Effective Indirect Tax function

The global tax environment is in a state of fast change. A shift to indirect taxes represents the global trend. Driving Indirect Tax Management therefore becomes more and more important. The key to success in the management is the ability to translate indirect tax knowledge into a workable business process.

In general the advisory sector may bring you a wealth of knowledge but in practice the translation gap to a process within the actual execution of the theory makes a business vulnerable for an endless increase in consulting cost and an ineffective approach in timely dealing with current indirect tax exposures. This may easily result in a financial disaster.

Tax authorities are continuing to pick up on the common weaknesses identified in the Indirect Tax function. The restyling of the indirect tax function in a business may have to be considered by a business in order to deal with the increasing number of indirect tax challenges or to benefit from indirect tax opportunities.

Enhance the indirect tax communication within the business functional hierarchy, increase business awareness of the current state of its indirect tax function and set the right priorities for in-house stakeholders/departments (AP, AR, Legal, Finance etc) to successfully move to a best-practice is our philosophy.

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 perspective.

A mythological way to express our mission statement would be to compare the general Indirect Tax function with the fall or rise of the Phenix legend.

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