Tax Transformation: What does it mean to you? Transform to Perform Tax Transformation: What does it mean to you? Nathan Andrews, Partner Carl Mallios, Partner Allison Matthews, Senior Manager Deloitte Tax LLP May 1, 2015

Trends in tax transformation

Trends in tax transformation Why tax? Why now? Accelerating globalization Growing business complexity and regulation Evolution of tax applications Tax considerations can be pivotal in strategic business decisions Tax risks are growing due to changing tax laws in multiple jurisdictions Commercial tax applications have come of age, enabling wholesale process change Evolution of the finance function Intensifying competition Increasing need for diverse talent CFOs expect tax executives to do more with less New competitors, markets, and business models are driving need to grow top line Tax departments require personnel with advanced technology and business skills

Trends in tax transformation Focused vs. integrated transformation Global Tax Strategy Development and Execution Tax Accounting C-Suite Communications In-Country Taxation Finance/ Capital Structures (Treasury Support) Indirect Tax Risk and Controversy Management Regulatory Compliance Customs Tax Resource Management Transfer Pricing

Emerging expectations

Tax departments tend to be the largest consumers of financial data The way forward How can tax create value? Gain efficiencies Manage risk Boost EPS Tax departments tend to be the largest consumers of financial data Regulatory complexity and increased scrutiny add pressure to global compliance and reporting burdens As a rule, taxes represent the single largest expense on P&L after cost of sales

What is the transformation? Expanding the role of the tax function Traditional role Enhancing the tax function for greater impact Planning The company’s tax & finance profile Process, technology, and data management People Sustainability and efficiency Emerging additional expectations Reporting Strategic partnering across the organization Managing Collaboration Clear communication Leading strategic initiatives Derived from Deloitte stakeholder interviews, including over 70 CFOs, in preparation for Deloitte Tax Executive Transition Labs™.

Expanding the role of the tax function Enhancing the tax function for greater impact Process, technology, and data Sustainability and efficiency Establish global tax processes Integrate technology across business functions Access data for increased efficiency and effectiveness Maintain quality of data used by Tax Consistently reduce cost of global tax function Deliver high quality at low cost in mature areas Align with statutory accounting Increase Tax partnership across the enterprise Tax function People Meet heightened expectation of sustainability and efficiency in traditional roles Determine appropriate sourcing mix: in-house, outsource, offshore, shared service center Implement succession planning

Expanding the role of the tax function Strategic business partnering across the organization Collaboration Clear Communication Leading Strategic Initiatives Expanded responsibilities for Tax require close collaboration with every facet of the business in order to understand and gain alignment with the overall business strategy Articulating a confident, concise, and compelling value proposition for an integrated and well-funded Tax and risk management function to a non-tax audience Leads projects across functions that align with the company’s vision, while maintaining line of sight throughout the organization

The way forward

Transformation enablers Critical enablers to successful transformation Data and technology People and organization Risk framework Business partnering Fully leverage existing technology Integrated systems versus point solutions Integrated data requirements Embedded reporting Bolt-ons Accommodating Business Model Optimization structures Addressing time consuming or problem areas Operating models Focus on cost reduction Tax professionals of the future Demonstrating value of the Tax department Tax Risk Intelligence Tax in the board room Data analytics Knowledge of the business Collaboration with the business Alignment with business strategy and priorities Communication of risks

Opportunities to transform vs. react Operational Transfer Pricing Business Model Optimization Integrated Tax Systems Tax Data Management Organizational Design Sourcing Tax Technology Architecture

Taking action to transform 2 Understand perspectives and expectations 1 Define your vision Focus: Gain insight into perspectives from external stakeholders and your direct reports to calibrate expectations and understand opportunities for transformation and alignment Focus: A shared vision of key characteristics that define your department in 3-5 years. 3 Assess your effectiveness Prioritize: Validate the competency model for your department and assess your effectiveness across four key enabling areas. Identify opportunities to improve your performance or create more value for the organization. Transform 4 Prioritize opportunities 6 Confirm your commitment Prioritize: Consider your vision for the future Tax department and select a subset of priorities (competencies and/or enablers) to focus on based on the potential value to the organization. Mobilize: Identify areas of confidence and concern relative to executing against your initiatives. Commit to specific actions as individuals and a team to move toward your vision. 5 Develop initiatives and mobilize Mobilize: Dig into root causes and identify potential approaches to address high priority competency areas. Develop an action plan with key milestones and owners.

Building a business case Alignment and scope Value discovery Analysis Validation Establish understanding of tax alignment process Agree on approach and scope of tax business case Develop and prioritize a list of potential value areas and pain points Broad-based review of tax processes, workpapers, filings, and tax planning Conduct workshops Estimate value of potential benefits Develop solution recommendations and overall value proposition Refine business case and benefit estimates Prepare business case presentation Review, validate, and finalize business case with stakeholders Present findings to finance executives and project sponsors

Questions and answers

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