BEPS is here, and with a looming deadline for when the first reports are due to the ATO, how ready are you?
If you work with a multinational affected by the new BEPS regime, there’s no time to waste. Businesses with December balance dates must file documents by February 2018. The bulk of Australian multinationals, with mid-year balance dates, will need to file by 30 June 2018.
Thomson Reuters’ 2017 Global BEPS Survey received responses from 135 corporate executives and tax and transfer pricing executives, across dozens of countries and industries. Of those respondents, just 27 per cent were “extremely confident” that they could respond to the most frequently-cited BEPS challenges – country-by-country reporting requirements, and master and local filings.
A core concern from companies we talk with is that the BEPS measures require substantial changes to IT systems. Our Managing Director for Tax and Accounting ANZ, Ben Scull, has described business uptake of new technology for BEPS as “minimal” so far, with many organisations preferring expensive outsourced solutions.
Thomson Reuters has suggestions in relation to readying your company’s systems for BEPS. They’re supported by three years of our Global BEPS Surveys, our discussions with tax executives, and our own BEPS experience. Whether you’re a CFO, tax manager, tax director, or other tax operations professional, now is an ideal time to examine whether your technology can cope with BEPS.
1. Assess what you do and where you are
Take your existing knowledge and drill a level deeper into your tax systems and processes and any existing tax technology strategy. Sketch out the BEPS process from end-to-end. Gather data to identify risks, opportunities and priorities.
Thomson Reuters’ Ben Scull notes that this work is about more than technology. It also encompasses both people and processes. The Thomson Reuters white paper Evaluating Your Tax Technology can help in this assessment; it includes questions that should be considered when evaluating your systems and identifying issues with existing technology tools.
2. Map your relationships
Work out how tax data and documents are shared between people and used in processes. Understand why different people require particular information.
3. Take it global
New international legislation such as country-by-country reporting requires multinationals to have a consistent process across multiple countries to manage source data and compliance reporting. To meet these new challenges, many organisations are now looking to centralise compliance and reporting across multiple jurisdictions.
Tax systems play a vital role in these projects, standardising control processes to eliminate risk, reduce costs, and allow for more flexibility and better change management. Ensure you know how different parts of your organisation are managing tax.
4. Collaborate and analyse
Once you have completed your list of systems, processes and relationships, begin to look for common results and patterns.
Issues can fall into several categories or types. Attempt to organise your issues into groups such as system performance, process gaps, source data, training issues, and high-risk requiring immediate response.
Look for patterns, such as a lack of training, and take steps to address them, including calling in outside help.
Scull suggests one focus should be the resolution of data issues that are created when transactions enter corporate systems. “You need to understand how that data is then going to flow into your tax compliance outputs. And you need to be determining, when that data goes into your system, what the transfer pricing implication is going to be.” The Thomson Reuters white paper Evaluating Your Tax Technology contains worksheets to aid in assessing goals, risks and constraints.
5. Identify your BEPS compliance solution
BEPS is a new element in companies’ tax technology challenge. Scull notes that at least for their first year of BEPS analysis and reporting, many companies are outsourcing their compliance to external advisory services firms.
However, by looking at the state of their underlying systems and processes and fixing problems, he says, businesses can position themselves to consider broader and more lasting solutions. The challenge is “ensuring that you have the business’ IT team on side and willing to commit to a project like this”.
The right solution can step you through the data collection and analysis process, make sure all parts of the corporate network have consistent information for tax authorities, and allow you to prepare drafts and lodge documentation.
Thomson Reuters has to prepare its own CbC Report and master file worldwide, and a local file for Australia. Our solution to simplifying and gaining control over our BEPS response is to use our own BEPS Action Manager software. Thomson Reuters’ own tax director, Simon Haddad, describes it as “indispensable”.
Learn more at tax.thomsonreuters.com.au/onesource/beps-action-manager/
You can download Thomson Reuters’ white paper Evaluating Your Tax Technology, here.
If you’d like to take a closer look at the fundamental changes BEPS has brought to tax reporting for organizations worldwide, download your free copy of the 2017 Global BEPS Survey Report: