1

Streamlining Global TaxAutomation

ZyTax is an organization committed to excellence inautomation of Tax determination and compliance.

Headquarters – Houston, Texas

Employee owned with strategic financial partners.

13 year old company with 1500+ InstalledCustomers.

Wholly owned subsidiary of FuelQuest, a leadingedge technology and business partner of choice forcompanies that buy, sell and distribute petroleumproducts.

OverviewOverview

ZyTax is quite simply the industry and government agency standardfor automating the determination, compliance, and filing of indirecttaxes with proven expertise in Excise Motor Fuels taxation.

2

Tax Process Life CycleTax Process Life Cycle

SourceTransactions

AccountingProcesses

EnterpriseSystems

AccountingData

TaxData

TaxProcesses

TaxDeliverables

Tax relevant data is requiredto process transactions

Accounting data entity andaccount determination aretax sensitive (i.e., legalentity)

Accounting processes aredesigned to make taxdecisions “transparent” tothe user

Tax relevant processes(for in-scope taxes,business units andlocations) documented

Tax attributes identifiedin each sourcetransaction process

Tax data elementsidentified andnormalized acrosstransaction processes

Tax decision-making isautomated in thetransaction processthrough businessrules, bolt-ons, or both

Accounting masterdata structures includetax classification

Tax attributes are captured& stored in transactiontables

Tax reports are included instandard package or arecustom developed

Audit trail from transactiondetail to tax decision-making is maintained

Tax data is interfaced tokey tax compliance andplanning systems (internalor external)

Accounting data is archivedin compliance with taxrecord retentionrequirements

Cost of Transaction Tax ManagementCost of Transaction Tax Management

Cross border goodsand services

Promotion schemesTax recoveriesCash flow planningTax registrationsDocumentation

In m

illio

ns

0.65

1.56

0.190.230.30

0.55

$0

$2

$4 Processing Cost

Cost of Errors - Sales

Cost of Errors - Procurement

Penalties and Interest

Cash Management Cost

System Maintenance Costs

For every $1 billion in revenues, 3.5 million may be spent in transaction taxmanagement…

3

Tax Optimization and Risk ManagementTax Optimization and Risk Management

Complexity -> Cost -> ConfrontationIn a recent survey, over 300 EU Tax managers were asked what their primary

concern was in relation to indirect tax management in the EU;

Compliance disputes impact - Cost to Company, Reputation Cost, Audit Cost, Personal Liability,100%+(Fines/Fees/Penalties), & Cash Flows.

Compliance regulations are in a constant state of change.

Regulations vary between countries and within countries.

The ability to reclaim tax returns is increasingly difficult. (IRAP/HIPA)

VAT Fraud exposure ”carousel” – approx. 10 Billion Euro annually.

Scarcity of qualified resources becoming more difficult.

Excise fuels tax liability is exponentially greater than standard VAT liability.

The ability to address complexity becomes a strategic advantage

Complexity 33%Cost 13%Confrontation 5%All of the Above 49%

Direct TaxDirect Tax

Legal entity reporting Process for legal entity information

capture Definition and use of the ERP reporting

structure

Data sensitization and the identification of taxspecific items.

Use of ERP master data to provide for taxspecific reporting attributes.

Optimization of the chart of accounts

Capture and management of book to taxadjustments

Non ERP Solutions (Spreadsheets, taxspecific applications

Provisions versus returns process Provisions – Material Items Tax Return – No level of materiality

Direct taxes are levied by tax authorities on thetaxable profits of an organization

To be compliant , the organization must be ableto demonstrate that it is operates with in the taxcode of the jurisdictions in which it serves / hasa presence..

Organizations can spend vast resources onimplementing efficient R2PR, OTC, P2Pprocesses but not necessary optimal for tax.

Tax functions (and the shadow tax resources)spend vast time manually mining accountingdata to determine appropriate tax treatment.

Manual process typically evident in thecompliance process.

Context Challenges & Complexities

Tax requirements in ERP implementations are often of low priority for an ERPimplementation, but the foundation of the business model is typically based on taxefficient operations…

4

Indirect taxIndirect tax

Transactional Complexity Multinational / Cross Border Inco Terms Triangulation Acquisition & Use Taxes

Company Complexity International Trading Zones Registrations Establishments

Merger & Acquisitions Consolidated Reporting

Products & Services Products Services Special Combinations

Changing RegulationsExceptions/ Exemptions

Transaction taxes are indirect taxes levied by taxauthorities on the sale or purchase of goods andservices.

Found in different flavours around the world US: Sales tax and Use tax (avg. 6%) Asia/Pacific: Sales tax India; Goods &

Services Tax Australia; China; and manyothers

Latin America: IVA, Percepcion, Surtax(Argentina); state taxes in Brazil; andmany others

Europe: Value-Added Taxes (VAT – avg.18%) with many country specificvariations

Emergence of bolt-on tax determinationapplications (including non North Americasolutions)

Context Challenges & Complexities

Global Common Tax DesignGlobal Common Tax Design

Tax Process Management

Post &

reconcile tax

Manage tax (Compliance/

Audit/ Risk)

Analyse taxsensitive data

Extract taxsensitive data

Generate taxsensitive data

Maintain taxframework

Post tax back tothe ERP system

and reconcilebalances

Calculate andreport

Analyse data fortax calculationsand reporting

Store and accessdata for tax

analysis

Ensure businessprocesses capture

tax data

Maintain masterdata, mappingrules, decisionmatrices etc

Tax data is captured and held in the Enterprise solution Transactions are evaluated for Corporate Taxes months and years after the event. Therefore:

The lower the degreeto which Enterprisesolution meets taxrequirements

The greater theeffort of the taxorganization todetermine tax data atadequate levels ofgranularity andquality

The lower the valueof tax deductionsand adjustments dueto flat rateagreements with thetax authority.

The greater theeffective tax rate andhence the taxburden to theorganization

5

Tax Management SpectrumTax Management Spectrum

Tax processes useautomated datagathering toincrease efficiencyand reduce cycletime

Communication inthe tax organizationfocuses on reducingduplication of effort

Current data eithercaptured orarchived in existingfixed structure

Tax-relatedbusiness processesperformedseparately by usingor manipulatingexisting accountingdata

Significant time andeffort spentgathering data forcompliance andaudit

Data maintained atoperating units

Users focus ondata quality andreuse

Formal programsto improveperformance areinitiated

Data captured in aconsistent, taxsensitive structurewith centralizedaccess

Tax complianceand auditprocesses areintegrated

Tax activity shiftsfrom historical tocurrent focus

Live audit trail fromtax return to sourcedocuments

Organization hasaccess to completeset of tax knowledge(e.g research, auditready support)

Formal processes toenhance knowledgesharing andcommunication

The tax organizationis repositioned tomaximize valuecreation

Every tax department falls somewhere on the Tactical-to-Strategic Spectrum

TACTICAL TACTICAL STRATEGICSTRATEGIC

STATIC REACTIVE PROACTIVE PROGRESSIVE PIONEERING

Tax Management OptimizationTax Management Optimization

• Increaseoperationalefficiency

• Reduce Risk

• Optimize cashflow

• Decreaseliabilities

Strategy• Optimize Effective

Tax Rate

• Improve Direct TaxData Quality andComplianceEfficiency

• Streamline andAutomate InterimReporting

• Improve AuditEffectiveness

• Reduce TransactionError Rate

• Improve TaxForecasting andPlanning

Performance

Process

Technology

Data

Requirements

Optimized Tax Management will facilitate an organizations ability to collaborate andbecome a strategic member of the Business Process Management Team, using process,technology and people.

People

6

Streamlined Global Tax ManagementStreamlined Global Tax Management

Data sources PlatformW

eb portalPortal

Asset

Purchases

Sales

GL

Extracttransformand load

Datawarehouse

Documentrepository

Business processautomation

Reporting & Analysis

Calculation engine

Content Management

Document Management

Brow

ser

Other

Transactional Sourcesystem

s

Direct tax software

Streamlined Automation

Indirect tax software

Direct tax:

• Transactional data sensitisation

• Tax Data Warehouse

• Reporting

• Controls

Indirect tax:

• Global generic process

• Indirect tax management

• Reporting

• Controls