Global markets: challenges for businesses
Globalisation and technology have fundamentally changed the way businesses trade and interact, placing increased reliance on complex global supply chains.
While this has provided a market bounty for Australian businesses, the challenges faced in cross-border transactions are onerous, with numerous risk factors including transport logistics, currency fluctuations, environmental disasters and political unrest and … tax!
Thanks to global reforms, companies are under intense pressure to provide detailed reports to account for their tax position. And to monitor these, Tax Authorities around the world have teched-up, becoming more aggressive in how they pursue lost tax revenue. When it comes to global procurement transactions, governments hold both the buyer and seller responsible for tax.
Whilst Australia’s GST rate has remained at 10%, the variances in and mutability of indirect tax rates and schemes in other countries is profound. For instance, in the last year, there were over 5,000 tax changes across 15,000 jurisdictions for one of our biggest trade partners – the US. Other trade partners – Brazil and China – sport equally complex tax environments.
To manually keep track of these rates is a huge task- risky and ultimately unsustainable. Getting it wrong leads to incorrect amounts of tax being paid, resulting in fines for underpayment and a tarnished public image, or significant revenue loss through tax leakage for over-paying, not to mention precious employee time lost in tracing and resolving errors and relationship damage caused by disputes with clients.
Procuring a Tax Advantage: SAP Ariba and ONESOURCE
Global Managing Director for ONESOURCE Indirect & Property Tax, Chris Carlstead acknowledges, “tax has been a challenge for the procurement and supply chain customer group for some time. This complexity increases exponentially as you expand your business globally. Getting it wrong is expensive.”
Fortunately, there is a solution. 2017 saw the launch of the partnership between SAP and Thomson Reuters, leading to the development of a range of cloud-based solutions, including ONESOURCE SAP Ariba.
The SAP Ariba ONESOURCE partnership can help the Australian procurement and tax industries overcome these issues by seamlessly calculating tax behind the scenes, providing a highly desirable singular experience for the customer.
This combination allows businesses to ensure tax on every transaction, no matter where the jurisdiction, is right, the first time and every time. And by achieving this, companies are protected from a loss of revenue through manual entry errors and penalties for incorrect data, meaning more efficient and profitable procurement systems.
Through the ONESOURCE solution, “by introducing tax automation”, Chris explains, “you are able to remove that complexity as a concern in that transaction flow, and honestly, make it simple to conduct business.”
Get it right from the start
In a world post- Panama and Paradise papers – the penalties for non-compliance are harsh and costly, and its little wonder that many companies focus on this aspect when exploring options to improve their business processes and systems.
However, the benefits of adopting an automated system, such as ONESOURCE Ariba solution, are plentiful, and we are starting to see these positives as a driving force behind transformation. Chris Carlstead notes, “It’s understandable that businesses don’t want to be issued with big fines or to face a reputational hit, but it’s interesting that so many more now recognise that getting tax right is a big strategic opportunity allowing them to have much closer supply chain relationships.”
- Better customer relationships – Chris sums it up best, “when companies get tax right they remove a big problem between the buyer and seller, and ultimately improve the relationship.”
- Tax and the profit picture – traditionally tax has been calculated and paid at the end of the transaction, with an inbuilt margin for error – equaling in many cases an accepted loss. With ONESOURCE calculating the correct tax begins at the point of order. And while suppliers need to invoice correctly, it is even more important that buyers start the process off well with the right information.
Teching-up for the tax challenge
Whilst Australia’s tax regime has been relatively stable, we have one of the strictest compliance frameworks and follows a whole-of-tax compliance approach to tax governance. The proposed GST Large Business Program is the latest measure to shore-up our system. And to implement this compliance framework, Thomson Reuters, Tax & Accounting Manager Director, Edmund Wong, observes “Our Tax Authorities have embraced sophisticated technology in the enforcement of tax compliance, so to keep up, companies must also consider adopting the means to contemporaneously track, check and report.” Our ONESOURCE solution does just this as the only tax engine offering real-time integration with Ariba.
ONESOURCE: Providing an end-to-end tax experience
Procurement is one just small area now that we can help companies be confident that they are compliant. Thomson Reuters faces the same pressures as any multinational company, and so to help ourselves and others navigate the changing tax landscape, we developed ONESOURCE suite end-to-end tax solution – covering everything from Corporate Tax, Country-by-Country reporting, Transfer Pricing, FBT and Indirect tax.
As Edmund says, though solutions and our partnerships, “we are helping organisations meet their compliance and reporting challenges and giving them back invaluable time and resources to focus on strategic needs of the business.”