Improving effectiveness of your tax operations 10 May

Improving effectiveness of your tax operations 10 May 2012 CHARLOTTE RUSHTON MANAGING DIRECTOR, ASIA PACIFIC

Agenda • Changing tax landscape – opportunities and risks • Latest innovations in technology – how they can help • Positioning your business to take advantage of technology CONFIDENTIAL – NOT FOR REDISTRIBUTION 1

Changing tax landscape – opportunities and risks 2

CHANGING TAX LANDSCAPE Tax departments are performing under multiple pressures Legislation Organization Tax Resources External Tax Authorities CONFIDENTIAL – NOT FOR REDISTRIBUTION 3 3

CHANGING LANDSCAPE – LEGISLATION Legislation is frequently changing • Rate changes • Rules changes • New VAT/GST regimes • Tougher regulation • Greater disclosure requirements • Mandated e. Filing 4 CONFIDENTIAL – NOT FOR REDISTRIBUTION 4

CHANGING LANDSCAPE – ORGANIZATION Organizational structure and resource cutbacks • Increasingly global view • Cost reduction • Resource availability • Cash flow focus 5 CONFIDENTIAL – NOT FOR REDISTRIBUTION 5

CHANGING LANDSCAPE – TAX AUTHORITIES Tax authorities are becoming more aggressive • Sign-off requirements • More frequent tax audits • Risk profiling • System audits • More sophisticated data analysis 6 CONFIDENTIAL – NOT FOR REDISTRIBUTION 6

CHANGING LANDSCAPE – EXTERNAL Greater External scrutiny • ERP upgrades • Media tax interest • Investor demands • Greener focus 7 CONFIDENTIAL – NOT FOR REDISTRIBUTION 7

Risks These pressures can result in. . . • Stretched tax resources • Late filing of tax returns • Human errors • Missed tax opportunities • Reduced shareholder value • Greater exposure during audits • Impaired relationship with tax authority 8 CONFIDENTIAL – NOT FOR REDISTRIBUTION 8

Opportunities Changes can also bring about opportunities… • Tax incentives / rulings • New tax authority initiatives • Restructuring opportunities • Rising importance of tax in the boardroom • Review historic practices: − Process re-design − Outsourcing − Leverage technology 9 CONFIDENTIAL – NOT FOR REDISTRIBUTION 9

Changing role of tax professional External pressures mean tax needs to move from heavy focus on Tax professionals have to find ways to shift the focus compliance to strategic, value adding responsibilities Today Resources to focus on strategic areas Advanced tools for analysis and decision making Operational Tasks Automated Strategy and Planning Analysis and Optimization Desired Compliance CONFIDENTIAL – NOT FOR REDISTRIBUTION 10

Latest innovations in tax technology – how they can help 11

Tax lifecycle Great potential for reuse of information and decisions Tax Planning and Cashflow Management Transfer Pricing Strategy Transfer Pricing Compliance Tax Provision Calculation Provisional Tax Returns Corporate and Indirect Tax Return Submission 12 CONFIDENTIAL – NOT FOR REDISTRIBUTION 12

How can tax technology help? • Streamline processes, free up staff time • Eliminate key-person dependency • Reduce costs through use of outsourcing services • Improve quality of data • Improve accessibility to data • Reduce risk of error • Improve visibility and control • Demonstrate control to authorities CONFIDENTIAL – NOT FOR REDISTRIBUTION 13

Tax technology tools A variety of tax software solutions exist • Tax provisioning • Tax document and risk management • Tax research • Workflow management • Tax determination systems (‘bolt-ons’) • Tax compliance 14 CONFIDENTIAL – NOT FOR REDISTRIBUTION 14

Tax Provision – Case Study • Company – Oil & natural gas drilling contractor – 25, 000 staff – Operations in US, Middle East, Asia • Challenges – Consolidating data from multiple general ledger systems – Manual spreadsheet calculations – Time consuming preparation and review CONFIDENTIAL – NOT FOR REDISTRIBUTION 15

Tax Provisioning – Case Study • Solution – Implementation of software tool for greater automation of tax provisioning process BENEFITS Greater accuracy, consistency and transparency Time saving in domestic tax provision of 85% Time saving in international tax provision of 50% CONFIDENTIAL – NOT FOR REDISTRIBUTION 16

Indirect Tax Determination – Case Study • Company – Multi-national Fortune 500 Technology Company – Revenues >$20 Bn – Asia HQ, Operations in 65+ countries • Challenges – Maintenance of data for more than 1, 500 tax authorities – Manual processes – Tax calculations for multiple data sources – Variety of tax types, including environmental handling fees 17 CONFIDENTIAL – NOT FOR REDISTRIBUTION 17

Indirect Tax Determination – Case Study • Solution – Implementation of automated indirect tax determination tool Tax Audit Tax Request Tax Result ERP (SAP), legacy, home-grown apps Determination Engine Reporting Compliance BENEFITS • Automated tax rule changes for 65 countries • Increased accuracy and reduced workload of tax department • Reduced filings and filing adjustments • Streamlined processes for environmental handling fees • Minimized need for IT support to manage changes in tax rates and fees 18 CONFIDENTIAL – NOT FOR REDISTRIBUTION 18

CASE STUDY – TRANSFER PRICING • Company – Software Development and Services – US Parent with Subsidiaries in Asia – Related Party Transactions for the Use and Distribution • Challenges – Legal Counsel Constructed Terms and Conditions – Recommended Agreement Structure impacted profitability of Asia Subsidiaries – Potential to influence value of IP transactions with third parties – Highly Regulated Transaction 19 CONFIDENTIAL – NOT FOR REDISTRIBUTION 19

CASE STUDY – IP TRANSFER PRICING Internal Licensing Example Third Party Licensee 1 Licensor Licensee Tested Transaction (Asia Based Sub) (US) 2 Third Party Licensor CONFIDENTIAL – NOT FOR REDISTRIBUTION 20

CASE STUDY – IP TRANSFER PRICING External Licensing Example Licensor Tested Transaction (Asia Based Sub) (US) Third Party Licensor Licensee Royalty Rates Third Party Licensee 21 CONFIDENTIAL – NOT FOR REDISTRIBUTION 21

CASE STUDY – IP TRANSFER PRICING • Solution – IP Transfer pricing software provides global comparables to influence the firm’s IP Policy BENEFITS Corroborating External and Internal Comparables strengthen regulatory compliance Global data proved what the market would sustain Satisfied Stakeholders and Increased Compliance Over 100 K USD of savings to Asia Subsidiaries 22 CONFIDENTIAL – NOT FOR REDISTRIBUTION 22

Positioning your business to take advantage of technology 23

POSITIONING YOUR BUSINESS • GPS for tax? CONFIDENTIAL – NOT FOR REDISTRIBUTION 24

DEVELOP TAX TECHNOLOGY ROADMAP 1. Define the desired future state 2. Understand current state and prioritize required improvements Automated Determination End to end automation Automated compliance Tax data verification Tax data validation 3. Map the path and the steps to achieve incremental results CONFIDENTIAL – NOT FOR REDISTRIBUTION 25

SUMMARY • Increased pressure on tax from legislation, organization, tax authorities and other external forces • Changes create both risks and opportunities • Tax needs to move from the focus on compliance to the more strategic value add • Technology is one way of facilitating this move CONFIDENTIAL – NOT FOR REDISTRIBUTION 26

Thank You ? QUESTIONS? 27 CONFIDENTIAL – NOT FOR REDISTRIBUTION 27