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

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

Changing tax landscape – opportunities and risks 2

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

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

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

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

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

CONFIDENTIAL – NOT FOR REDISTRIBUTION 8 Risks 8 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 These pressures can result in...

CONFIDENTIAL – NOT FOR REDISTRIBUTION 9 Opportunities 9 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 Changes can also bring about opportunities…

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

Latest innovations in tax technology – how they can help 11

CONFIDENTIAL – NOT FOR REDISTRIBUTION 12 CONFIDENTIAL – NOT FOR REDISTRIBUTION Tax lifecycle 12 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

CONFIDENTIAL – NOT FOR REDISTRIBUTION 13 CONFIDENTIAL – NOT FOR REDISTRIBUTION 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 14 CONFIDENTIAL – NOT FOR REDISTRIBUTION Tax technology tools 14 Tax provisioning Tax document and risk management Tax research Workflow management Tax determination systems (‘bolt-ons’) Tax compliance A variety of tax software solutions exist

CONFIDENTIAL – NOT FOR REDISTRIBUTION 15 CONFIDENTIAL – NOT FOR REDISTRIBUTION 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 16 CONFIDENTIAL – NOT FOR REDISTRIBUTION 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% BENEFITS

CONFIDENTIAL – NOT FOR REDISTRIBUTION 17 CONFIDENTIAL – NOT FOR REDISTRIBUTION Indirect Tax Determination – Case Study 17 Company –Multi-national Fortune 500 Technology Company –Revenues >$20Bn –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

CONFIDENTIAL – NOT FOR REDISTRIBUTION 18 CONFIDENTIAL – NOT FOR REDISTRIBUTION Indirect Tax Determination – Case Study 18 Solution – Implementation of automated indirect tax determination tool 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 BENEFITS Determination Engine ReportingCompliance ERP (SAP), legacy, home-grown apps Tax Request Tax Result Tax Audit

CONFIDENTIAL – NOT FOR REDISTRIBUTION 19 CONFIDENTIAL – NOT FOR REDISTRIBUTION CASE STUDY – TRANSFER PRICING 19 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

CONFIDENTIAL – NOT FOR REDISTRIBUTION 20 CONFIDENTIAL – NOT FOR REDISTRIBUTION CASE STUDY – IP TRANSFER PRICING Third Party Licensee Third Party Licensor Tested Transaction 12 Licensor (US) Licensee (Asia Based Sub) Internal Licensing Example

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

CONFIDENTIAL – NOT FOR REDISTRIBUTION 22 CONFIDENTIAL – NOT FOR REDISTRIBUTION CASE STUDY – IP TRANSFER PRICING 22 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 100K USD of savings to Asia Subsidiaries

Positioning your business to take advantage of technology 23

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

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

CONFIDENTIAL – NOT FOR REDISTRIBUTION 26 CONFIDENTIAL – NOT FOR REDISTRIBUTION 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 27 CONFIDENTIAL – NOT FOR REDISTRIBUTION Thank You 27 ? QUESTIONS?