Richard Cornelisse

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Relevante belastingdata vanuit TP en BTW: de ‘Waarom’, ‘Wat’ en ‘Hoe’

In Indirect Tax Strategic Plan on 16/03/2017 at 2:26 pm

Door Richard H. Cornelisse en Edwin van Loon
Gepubliceerd in Vakblad Tax Assurance

Samenvatting

De belastingmoraal verschuift. Steeds meer wordt iets wat wettelijk gezien mag, niet automatisch ook geaccepteerd door de publieke opinie. Reputatieschade dreigt. Belastingdiensten worden ook scherper, op zowel directe en indirecte belastingen. Ze willen vaker, sneller en meer gegevens zien. Daarnaast is er een tendens om de eindverantwoordelijkheid voor fiscale zaken hoger in de onderneming te leggen; in het Verenigd Koninkrijk ligt die sinds vorig jaar zelfs al bij de Raad van Bestuur.

Die twee tendensen stellen eisen aan de interne fiscale afdelingen en de externe accountants, maar bieden ook kansen. De gegevens die de belastingdiensten eisen, zouden door het bedrijf zelf goed gemonitord en geïnterpreteerd moeten worden, om te kijken in hoeverre die gegevens misschien wijzen op ongewenste situaties en te grote belastingrisico’s. Het kan ook zo zijn dat die gegevens duidelijk maken dat het bedrijf er misschien goed aan doet de bedrijfsprocessen anders te organiseren.

Door samenwerking van fiscale specialisten kan een gezamenlijke verantwoordelijkheid voor het totale fiscale reilen en zeilen van de multinational ontstaan. Van daaruit is een beter zicht op mogelijk gewenste investeringen voor het bedrijf mogelijk. Zo kan fiscaliteit de plaats innemen die het misschien altijd al verdient: als belangrijk onderdeel van het totale overkoepelende ondernemingsbeleid.

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Geschreven door Richard H. Cornelisse en Edwin van Loon

  • mr. Richard H. Cornelisse, Tax Assurance Expert, managing director van de Key Group en Phenix Consulting
  • Edwin van Loon RTAP, Tax Control Framework Coordinator ING Bank NV

SAP add on for ‘VAT Smartform PDF’ in Poland

In Indirect Tax Strategic Plan on 26/02/2017 at 8:43 pm

We offer a new SAP add-on solution that creates automatically the VAT Smartform from SAP. When our SAF-T SAP add-on solution has been purchased this additional functionality will be managed under SAF-T cockpit as a different report.

Companies selling across European Union borders have to submit EC Sales List (ESL). This should contain the details of sales or transfers of goods and services to other VAT registered companies in other EU countries summarized per VAT registration number. The tax authorities in the EU use the listings to check whether VAT is declared by the parties involved in cross-border transactions (e.g. no mismatches).

In Poland a specific extra local requirement applies. As of 1 January 2017 taxpayers making transactions with EU members will be required to submit mandatory the declaration in electronic format.

The Polish tax authorities provides a VAT Smartform PDF that a company has to fill in with the requested information. That Smartform is mandatory and must be used to meet the requirement. Without automation support the data has to be entered manually by the company.

Entering data is a time consuming process. Besides the impact on internal resources, such manual activity increases the risk of data errors, i.e. with entering the VAT registration numbers in the Smartform.

Stricter penalties apply for individuals involved in tax fraud and penalties are introduced for taxpayers who do meet the legal requirement of submitting declarations in electronic format.

Source: SAP – submitting close to real time data to tax authorities

In Spain on 1 July 2017: immediate supply of Information to tax authorities in force

In Indirect Tax Strategic Plan on 24/02/2017 at 4:40 pm

In Spain a new VAT reporting system will enter into force on the 1st of July 2017. The new Spanish requirements will have a huge impact on many (multi)nationals that run SAP as standard SAP will not provide an E2E solution.

SAP add on for SII

The SAP add-on is based on the selection of the VAT relevant transactions from the SAP ledgers. This can be done manually with a new SAP transaction or in an automated way via scheduled batch jobs. The SII relevant data from the selected source transactions are stored in a new customized SII table. That single source ensures your data integrity and consistency. There will be no need for maintenance of multiple systems as it will all be maintained in SAP itself. All reportable SII data are available via a single SAP cockpit which enables easy (tax risk) management of the SII reports.

Read more: In Spain on 1 July 2017: immediate supply of Information to tax authorities in force

SAP add-on for immediate Supply of Information (SII) in Spain

In Indirect Tax Strategic Plan on 19/02/2017 at 8:55 pm

SII (“Suministro Inmediato de Información”) in Spain is about changing the current VAT management system which has been in place for 30 years, introducing a new bookkeeping system for VAT on the AEAT online system, by providing all billing records virtually immediately.

The new Immediate Supply of Information accelerates the gap between recording or booking invoices and the actual realisation of the underlying economic transaction.

It is introduced because the current technological situation allows its implementation at this time, to improve both taxpayer assistance as taxation controls (e-tax audits).

SAP add-on solution

In Spain a new VAT reporting system will enter into force on the 1st of July 2017. The new Spanish requirements will have a huge impact on many (multi)nationals that run SAP.

Businesses classified as large companies will just have a couple of months left to adopt this new requirement in its processes, controls and systems.

It will be a real challenge. Failure to comply in time could result in penalties and increased risk of a tax audit. The goods news is that we developed already a SAP integrated SII solution.

That is not new for us as we have developed similar SAP add-on solutions before when SAF-T in Poland, Lithuania and Norway was introduced. SII is our next step in supporting clients that face IT business challenges.

We developed a SAP add-on solution by which the e-submission of the required data from AR and AP invoices is fully integrated in SAP without an external interface or use of external software.  With this add-on the submission of the requested invoices can be done automatically and in time.

Our SII for Spain is ready and functionality can be demonstrated via our own SAP environment.

Read more: SAP add-on for immediate Supply of Information (SII) in Spain

A SAP add-on to be able to cope with SAF-T and e-tax audits

In Indirect Tax Strategic Plan on 03/02/2017 at 8:27 pm

standing

Tax authorities around the world want to receive more frequent and faster tax relevant data for e-audit purposes to analyse Corporate Income Tax (CIT) and VAT positions taken to combat VAT fraud and to determine whether actually a fair share is paid (Base Erosion and Profit Shifting: ‘OECD’s BEPS’).

More countries will therefore move to data request to monitor and electronic audits (e-audits) taxpayers. SAP itself does not provide an E2E solution to meet these (new) legal requirements.
More an more countries will implement ‘the Standard Audit File for Tax Purposes (SAF-T) developed by the OECD. This format is intended to give tax authorities easy access to the relevant data in an easy readable format. This leads to much more efficient and effective tax inspections.
E-audits will be performed – using data analytics – on data submitted electronically by the taxpayers.

Read more

Do we see tax technology as an enabler or as a ‘magic’ way to be and get in control?

In Indirect Tax Strategic Plan on 21/01/2017 at 1:00 pm

  A Tax Control Framework should not operate in silo, but has to be aligned to the company’s business control framework (BCF) and should cover more from a tax risk management perspective than only compliance and financial risks. There are various BCF models developed and therefore differences exist between companies.

That same principle applies when we ‘wish’ for example to copy paste a ‘Best practice tax technology framework’ from one multinational to another multinational. The devil is often in the ‘implementation’ / ‘configuration’ detail as most of the time it is not ‘Plug & Play’. For example the legacy systems, business models and/or the structure of the tax function could be different.

When we talk about tax control framework do we focus nowadays not too much on compliance and financial risks?

What has been designed from a tax planning is not always properly implemented or has changed after implementation due to new business initiatives that are an unknown to the tax function due to lack of visibility or disconnect. That could result in material tax risks. Take for example strategic tax risks such as the management of non-routine transactions:

Open ‘Converting the sales middleman function from Commissionaire to LRD‘ for an example

Technology might be an enabler to manage such change management process better, but the people element (‘the interaction’) – especially if many work streams are involved – are the key drivers that together can realise ‘being in control’ at go-live and beyond.

Anticipating in time on tax developments and take action ‘see the 4 questions I raised and the answer I gave above’ is an other example that highlights why managing change is important from a tax control framework as it impacts all the risk categories including reputational, strategic and operational risks.

Source: From tax strategy to artificial intelligence to automating the tax adviser | Richard H. Cornelisse | Pulse | LinkedIn

From Artificial intelligence to Robocop to indirect tax

In Indirect Tax Strategic Plan on 19/01/2017 at 1:10 pm

 I truly love innovation. The sooner the better, but I consider all the stories about artificial intelligence and robotics still science fiction when this is discussed in connection to indirect tax.

A critical condition for success would be that ERP systems supported by tax technology could actually present real-time all the company’s (intercompany) business transactions. However, real-time access to a company’s blue print is often a recurring bottleneck during business model change (see example ‘Commissionaire to LRD‘).

Certain consultancy firms perform such transaction mapping still via interviews.

Without access to a complete data set, is artificial intelligence not useless?

Automating the adviser

That being said I think much more can be automated and will be automated. I published in February 17, 2012 my article ‘Google the (tax) adviser of the future‘:

[Time stamp 2012!] I am following the developments of Apple’s Siri of and of Google in general with great interest. Siri is the speech recognition engine that Apple uses as a virtual personal assistant for their devices. The software truly understands your questions, searches the web and provides you with answers immediately.

Google’s executive chairman, Eric Schmidt, has conceded that Siri could pose a “competitive threat” to the company’s core search business.

If that is the case, is it not realistic to assume that Google and/or other companies are going to invest a considerable amount of money in developing similar functionalities?

Such competition between these powerhouses will boost technology improvement.

  • Will such technology in the end truly understand all your technical questions?
  • Is a virtual personal assistant going to respond immediately?
  • Is this science fiction or our near future?

I am aware that some people will argue that certain knowhow depends on individual skill sets and expertise. For the moment, they are right, but they might be proven wrong in the future.

Can this also be automated?

What successful examples relate to strategic insight and decision-making? Chess is a strategic game and relates on fact-based information (pieces on the chess board: relevant facts) and a number of possibilities (moves: calculation of the impact of various options combined with overall strategic insight).

  • If a chess-playing computer, Deep Blue, can beat world champion Gary Kasparov in a six-game match by two to one with three draws against, shouldn’t the automation of an adviser’s strategic decision-making also be possible?
  • Deep Blue’s successor – Watson – has beaten Jeopardy champions at their own game. What was needed to make that happen: “natural language processing, searching immense data sets and creating relationships among disparate sources of information to finally culminate in an answer.”

The good news is that the profession of service providing is a people business. We like to be connected to people. Maybe the statement about automating the adviser is a bit too provocative, but I still believe a lot more can be automated than we can currently comprehend.

Having an open mind is the message I want to get across. The only things that probably cannot be automated are our feelings and interactions.

That is why it is and will remain a people business. Last but not least, I don’t pretend to write the strategy plan for Google.

I just admire companies like Google, Apple and Virgin for their innovations and culture. In this blog “Google” represents companies that are technology innovators. The future adviser could therefore be somebody else.

Do you agree?

Source: From tax strategy to artificial intelligence to automating the tax adviser | Richard H. Cornelisse | Pulse | LinkedIn

From tax trends to  assessment to implementation

In Indirect Tax Strategic Plan on 19/01/2017 at 12:59 pm

Lets just assume that tax transparency and disclosure of tax risks to the tax authorities is mandatory in force in every country and that the effectiveness of a tax control framework should be proven.

  • Are OECD’s Standard Audit File for Tax Purposes data requests (monthly and on request) – now rolled out in various European countries – the start of a new beginning for better audits by the tax authorities?
  • Is it likely that tax authorities will get access to more sophisticated tax analytics tools?
  • Do companies need better risk management tools to meet tax objectives set derived from business objectives?
  • Do companies face additional tax risk due to (close to) real time data requests of the tax authorities – implemented for example in Brasil and will be in force in Spain per July 1, 2017 – and does it impact a company’s audit defense, tax risk management, ERP systems and tax technology?

Without doubt, the answer to all questions is a resounding yes.

Source: From tax strategy to artificial intelligence to automating the tax adviser | Richard H. Cornelisse | Pulse | LinkedIn

From tax strategy to artificial intelligence to automating the tax advise

In Indirect Tax Strategic Plan on 19/01/2017 at 12:54 pm

‘Innovation’ and ‘Tax strategy’ have my interest. In the UK the Executive has to sign off the company’s tax strategy and publish. The strength of the UK approach is that the Executive has to take position and also has to keep its promise as a public statement is made.

This legal change realises that it has now become an Executive owned KPI to manage ‘overall tax risks’ resulting that the supervisory board and external auditor have the responsibility to audit ‘in compliant or not’ as the company might face reputational risks when that promise is not kept.

Without such Executive sign off not much would have changed tax function wise. At least that is the lesson learned from the Dutch initiative: ‘Horizontal Monitoring’ where such a sign off and public statement were missing.

Do you see the difference from a governance perspective?

Source: From tax strategy to artificial intelligence to automating the tax adviser | Richard H. Cornelisse | Pulse | LinkedIn

Is the PwC GE deal a trend and the end of the Big4 as we know it?

In Indirect Tax Strategic Plan on 16/01/2017 at 8:23 am

PwC has taken over the global tax function of GE (600 people):

“We will also integrate GE’s tax technologies and end-to-end global processes into our own significant investments, allowing us to meet all of GE’s tax needs seamlessly. From compliance to deals to defense and controversies to sophisticated planning, our team will cover everything for GE while also providing that same expertise and access to tax technologies and process to other clients.”

An unexpected move of one of the Big4 and tip of the hat is well deserved. The advantages are clear. A considerable amount of global tax industry knowledge that you can combine with PwC tax consultancy knowhow.

The objectives for closing the deal are good, but in the execution realizing these synergies it often goes wrong. That risk should be remote as PwC Consulting supports multinationals in such change management exercises. I assume that this knowledge will now be used in-house.

Siemens

This deal is not entirely new. Siemens did a similar ‘sale lease back’ deal in 2000. Former employees of the central tax department of Siemens incorporated an own consultancy firm.

The background for going independent was – if I understood correctly – that Siemens was involved in many M&A activities and when companies were sold historical tax knowledge was lost. That new company avoided such a loss.

Incident or a trend

Is this an incident or will after outsourcing routine work to Shared Service Centers of third parties vendors, the new trend be to outsource to third parties a Centre of Tax Excellence: a former in-house global tax function.

Is that a market that private equity will see opportunities in – future IPO – or is now my fantasy completely taking over?

“John Connolly, the former CEO of Deloitte is partnering with private equity firm HgCapital on an “audacious plan” that will include “a string of takeover deals” to build a new firm to compete with the Big 4″ Source Report: Former Deloitte UK CEO Planning a New Big 4 Firm

Maybe we should reinvent and transform ourselves in dealmakers/brokers.

On a more serious note it could change the tax market. Private equity could setup a new global tax competitor of the Big4 with a global network without audit services in such a way.

Independence rules

The Big4 are audits firms and that means that an auditor should not investigate during an audit himself including his tax colleague that has implemented for example a control framework or took managerial positions or implemented and configured own tax technology.

The tax market nowadays is about (publishing and sign off by senior management – UK – of a company’s) tax strategy, tax transparancy and implement an effective tax control framework that you should be able to demonstrate and defend to the tax authorities.

When I was working at the Big4, it was not allowed to take managerial positions. I should always remain in my advisory role. That was also explicitly stated in the company’s Terms and Conditions.

In my dialy practice nowadays it is essential that you can explain in an elevator pitch where you differentiate from other players in the market. I always mention that we develop our own technology, do not only design but as well can implement and when necessary can take managerial positions.

We do not provide audit services and therefore are independent.

Where do I differentiate. Developing own technology in-house or implement the VAT determination logic in ERP systems itself, qualified in my time at the big4 as a red flag even if the client itself was not audited by the company I worked for.

My consultancy work should always have left the door open for possible future work for my audit colleague. However, it could be that these rules have changed in the meantime.

If the entire tax team left to PwC, is it not logical that managerial positions are taken if they still work in the same capacity for GE. Do people that remain at GE still have the tax knowhow to make own decisions or will they follow PwC GE blindly.

The latter does not apply if sufficient tax knowledge remains behind at GE who can make these tax judgement calls. An other option might be second opinions. GE hires another third party to do such tax management for them when needed.

That would bring outsourcing again to a complete next level. Every problem has obviously its solution.

Spin off

In the past an ‘One Stop Shop’ model at the Big4 was allowed and when a company was audited also tax services could be sold. That has changed for obvious and well known reasons.

Is the GE deal a trend and the end of the Big4 as we know it?

What is the reason besides income sharing that both audit and tax services are provided under one roof. If (tax) technology and implementing are the future does that not bite with audit services.

If tax management consultancy – how to realize tax function effectiveness – is the future, is it not important that you can be managerial from time to time and do the implementation yourself?

I believe that tax management consultancy under these terms will be the tax profession of the future.

I have a reason for asking all these questions. It is in my own self interest. I always tell my clients to anticipate on new tax developments and take action. Should I not practice what I preach and make a SWOT analysis and when needed reinvent myself?

That being said I have got sufficient time as I predict that any changes mentioned will probably not go that fast.

Am I wrong?

Richard H. Cornelisse

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