OECD BEPS 2.0 Tax Calculation and Reporting – Reporting on the calculated measures – Part 3
Hello everyone and welcome to reporting part of SAP Profitability and Performance Management OECD BEPS 2.0 Tax Calculation and Reporting sample content. In case you have not read first two parts of the blog posts, please follow link 1 and link 2.
In blog post, “OECD BEPS2.0: More than just a Hot Topic!”, we have obtained general understanding about the topic, it’s importance and the steps in calculating the necessary KPIs. Second part of the blog “OECD BEPS 2.0 Tax Calculation and Reporting – Story in sample content – Part 2” brought us great insight into story inside sample content.
This blog will provide you with better understanding of KPI’s crucial for the reporting as well as versioning part and possibilities of visual presentation of all calculated measures. Therefore, let’s began.
Reporting and versioning
As already mentioned, sample content is delivered with the predefined process template. In the prior post, Review and Update together with the Execution Node was explained in detail. Today, we will proceed with the reporting and versioning part, which are stored within Reports Node.
By opening Execution Result Report, end user will benefit from better insight into different KPI’s. For better analytical purposes, lets focus on one jurisdiction, for example Switzerland. As visible from report, total amount of the Top-Up Tax for Switzerland is 18.341.468 EUR.
In our MNE group structure, we have assumed that in Switzerland we have two companies: Sunshine Bern and Sunshine Zurich. According to Ownership Ratio, Sunshine Bern is fully owned by Sunshine Tallin, whereas Sunshine Zurich is owned by 60% by Sunshine Toronto and 40% by Sunshine Tallin (see relationship diagram on left side). This leads, that total amount of the Top Up Tax for Switzerland ( 18.341.468 EUR ) will be divided based on the ownership ratio. Corresponding amounts are shown in the Top Up Tax Amount Report (right PrintScrn).
Moving forward, among all other reporting queries, we have as well included Country by Country Report. Format of the report is standardized and prescribed by OECD as all large multinational enterprises (MNEs) are required to prepare a country-by-country report with aggregated data on the global allocation of income, profit, taxes paid and economic activity among tax jurisdictions in which it operates. By opening this report, all required information for delivering to tax authorities are already available.
As already mentioned in the previous blog post, we are giving end user possibility to edit and manually populate the data inside of the model table, but it can lead to some discrepancy in terms of tax authority auditing, therefore we are populating versioning data. How is versioning part done?
Once main calculation is done, end user will trigger Update Calculated Run to derivate new version and create historical data. After the run, results of the latest version will become available in Update Run Results.
In case any changes should be done, we are giving end user flexibility to make subsequent changes and to review influence on the results. Let’s take as example company Sunshine Budapest located in Hungary. As visible form the report below, Qualified Domestic Top Up Tax was 0 and that impacted overall calculation in data set of Version 1.
In case end user wants to amend QDMTT, it can be done in Update Manual Data. After saving the changes and running functions, overall calculation will be affected, and it will result in different data set in Version 2. Therefore, this query gives end sure possibility to compare different data sets.
Upon we have got familiar with data sets and reporting part, I suggest moving to visualization part attached to this process template. This is as well way for end user to review the data.
For the purpose of BEPS 2.0 Tax Calculation and Reporting management, we have divided it into four tabs. All reports in those four tabs, are created on the top of the input and result queries, presented in the Review and Update and Reports node. User can easily amend and adjust qualitative report by adding more tabs to suit its needs and preferences.
First tab represents overview on the total group level. On the left side of the screen end user can see dashboards containing relevant data whereas next to it on right side there is geo map. End user can easily observe how much EBIT is generated by each jurisdiction, how much top up tax should be paid and etc, using the geographic map and its hovering possibility.
In case end user prefers dashboard compared to visualization, all those KPI are listed below. Order is the same as calculation order in the system, so it is transparent and easy to track.
Except geo map, different chart types such as relationship diagram and heat map are available to allow flexibility in reporting and analysis. All those charts support slice drill down capability into the further dimensions, zooming and maximizing for deeper analyzes and configuration. Also, user can simply hover over the pie slices to see ownership structure, different KPI’s and the relevant amount.
As already mentioned, first tab gives overview on the total group levels, whereas second one provides analyses on the Jurisdiction level. On the right side of the screen there is stacked bar/column chart type showing average top up percentage and IIR Effective tax rate. Due to the drill down possibility, end user can benefit from more granular insight into jurisdiction level.
If we scroll down, directly below we have Sankey chart type. Due to the simple organizational structure, there is no much of the crossings. But after implementing real system data, there will be much more crossings and user will benefit from the hovering possibility.
Proceeding further to the third tab, Jurisdiction Reporting, CbCR & Simulation, hereby we are giving end user possibility to review calculated measures in the data grid overview. As most of the tax experts are quite familiar and comfortable with excel spreadsheets, we are intentionally giving this possibility of analyzing the data.
Country-by-Country Reporting (CbCR) has as well took part in our dashboards. In order to facilitate end user this collection process, we have created standard template fulfilled with the calculated measures.
On the bottom of the page, we have presented current tax KPI’s for Switzerland data. Moreover, these pieces of information are presented with purpose of showing the effect of changes in payroll expenses and tangible asset , in a what-if simulation. This what-if simulation is controlled by changing parameters, in this case, for payroll expenses and tangible asset. End user starts simulation via the Tools menu. New results for group tax rate and expected tax expense are shown in the dashboard What if Simulation after a short calculation time. We have created simplified version of the simulation just to show capabilities, but user has possibility of upgrading and creating more complex.
It is already end of the third part. As this is very popular topic, we will keep investigating and enhancing our sample content, therefore I am sure that shortly you will read more about this existing topic.
In the meanwhile, keep on thinking about possible improvements that we can undertake and feel free to ask questions.
Until next time,