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Headline Verdana BoldDeloitte TaxMax – The 43rd seriesOne bold step in the right directionRichard Mackender & Senthuran Elalingam l 22 November 2017by Deloitte Tax Academy

2© 2017 Deloitte Tax Services Sdn Bhd

One bold step in the right direction

Agenda

The Digital Economy 3

Background and market research 8

Managing tax challenges usingtechnology 13

Leveraging emerging technology 20

The journey 25

Q&A 27



The digital economy



Development

The digital economy

4

1

23

5

The spread of ICT across (traditional and innovative) businesssectors

Business models have changed and are changing

Accelerated and changed the spread ofglobal value chains

A result of transformative process brought byinformation and communication technology (ICT)

Increasingly becomingthe economy itself



New and dynamic business models

The digital economy



Digital economy: direct tax issues

Incomecharacterisation

Profitallocation

Taxablenexus

• Remote supplies ofgoods and services

• PE / source

• Novel approaches

• Technologicaldevelopments

• Royalty vs. service

• Withholding taxes

• High valueintangibles

• R&D

• Transfer pricing:DEMPE* functionsand risk assumption

* DEMPE - development, enhancement, maintenance, protection and exploitation of intangibles



Global VAT / GST developments

Digital economy: VAT issues

BEPSAction plan

15 Actions

VAT / GSTguidelines

OECDWorkingParty 9

B2B B2C

Endorsed byGlobal Forumon VAT on 18

April 2014

Endorsed byGlobal Forum

on VAT on6 November

2015

Action 1:digital

economy

Includesrecommendations

to implementprinciples from

VAT / GSTguidelines

Final BEPSpackageendorsedby OECD /

G20 inOctober

2015

Finalinternationalguidelines

published byOECD on 12April 2017



Background and marketresearch



The evolving tax landscape

Driving change in the tax function

Technologyand

resource

Economicevents

Newlegislation

Taxauthorityapproach

Taxenvironment

Businessglobalisation –more obligations,greater economiesof scale

Responsible tax –more stakeholdersand scrutiny

Increasedlegislation – morerules, complexity

Tax authoritytransformation –using andsharing data

Technology –new risksandopportunities

Resource –new skillsrequired



Market research

Views from the Head of Tax

34% 34% 33% 34%

16%

42% 43%36% 37%

26%

58% 55%50%

58%

45%

0%

20%

40%

60%

Maximisingquality

Guaranteeingcontrol

Ability to addvalue

Managingcosts

Processefficiency

2016

2014

2012

40%

57%

38%

40%

56%

40%52%

41%54%

28%

53%45%

38%

63%

0%

20%

40%

60%

80%

Quality Control Ability to addvalue

Cost Process efficiency

Decentrliased functions

Coordinated functions

Centralised functions

• Satisfactionlevels are at anall time low

• Particularly interms ofprocessefficiency

• Tax functions feelhappy with levelsof quality

• Control andprocess efficiencyare areas offocus

% of respondents “satisfied” with current state

Anticipated importance of drivers over next three years



Market research

The potential of technology

Source: Deloitte Global Market Research, 2016

High current benefit

Many businesses see highpotential benefits usingtechnology in different areas oftax.

……but few are actuallyrealising those benefits

High potential benefit

66%64%

40%

32%

Processefficiency

Quality andaccuracy of data

Riskmanagement

Planning andbusiness

decision making

20%22%

14%12%



Tax technology today



Managing tax challengesusing technology



Example tax technology considerations

Challenges Characteristics ofenabling technology

Significant

volume of

data

Regular,

time

consuming

processes

Errors from

manual

manipulation

Tax

authority

focus on

data quality

Reliance

on non-tax

personnel

Visibility

over global

compliance

ERP

sensitisation

Process

automation

Audit trail

Workflow

Document

management

Data

validation




A global tax platform,providing…

Deadline, process and

documentation in one place

Maintained global tax

deadline content across

multiple regimes

Global dashboard reporting

Data aggregated for quick

access to everything you

need

Standard process workflows

myInsight

Dashboards




• Deloitte Indirect Tax SMARTsupports the end-to-endstandardised indirect taxcompliance

• Uploads and consolidatesdata

• Data cleansing through Pre-Agreed Adjustments (PAA)

• Data quality checks (DQC)and exception reports

• Return generation andsubmission

• Full audit trail

• Management reportingbased upon structuredtransactional data

Indirect Tax SMART

GST analytics




Risk assessment on CbCR datato be provided to taxauthorities, including analysissuch as:

• Effective Tax Rate (ETR)and Cash ETR

• Percent of related revenuesto total revenue

• Number of employeesversus:

• Unrelated partyrevenues

• Profit before tax

• Stated capital

• Tangible assets

Country-by-country DigitaleXchange (CDX)

CbCR analytics




Business Traveller



Tax technology architecture



Leveraging emergingtechnology



Emerging technologies

Emergingtechnologies

Roboticprocess

automation

Cognitivecomputing

Cyber &data

privacy

Big data

AI

Blockchain



Robotics in tax video



Robotics in tax examples



Tax work will be reconfigured

• Routinised

• Decomposed

• Disintermediated

Resource models will change

• Far-shoring?

• Online collaboration

• Crowd

Implications for the tax operating model

New types of people will be needed

• Para-professionals

• Process engineers

• Systems designers

• Data scientists

Focus of the tax function will be

redirected

• Business partner

• Proactive not reactive

• Effective and efficient



The journey



Where should you start?

Have a tax technology

plan

Layout a roadmap

Allocate responsibility fordelivery

Agree to it and securebudget

Create a tax technologyvision

Map the current state

Consider what is possible

Develop a desiredarchitecture

Reassess the taxoperatingmodel

Review the process design

Reconsider the resourcingmodel

Refine the governanceframework



Q&A

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