The need for this service is driven by the rapidly changing tax environment throughout every country and region. Examples of such change are Pillar 2 rules, Hybrid and Anti-Hybrid rules and similar approaches to avoid abusive jurisdictions and structures.
Some of these are EU implemented and some are locally/OECD implemented and companies should not ignore them.
- What is the basic data necessary for an advisor to assess your exposure to changes in tax rules?
What are the key data points — revenue, expense, active versus passive revenue, company structures, interest expenses, intercompany payments, rental income versus earned income, expense as percentage of revenue? How do you gather these? What renovation is needed to have these to hand?
- How should this information be organised to be ready for an advisor?
What is the most important information for an advisor? What are the data structures they need? How does this vary by region? What are the updates in each year for what should be maintained for the advisors? How will the advisors price their services relative to the information?
- How does one minimise annual filing cost?
How often must filings be done? In what jurisdictions must filings be done? Is there unique information required in any jurisdiction? How can one organise to minimise tax prep costs each year/quarter?
What is the filing schedule and type for each entity in your structure? How do they affect the other companies?
Understanding the required data also requires understanding what is required from each company and how that will affect both the timelines and the data requirements of each of your upstream companies.
- What data is necessary for best performance and reporting but also to be prepared for exit
One of the most important due diligence areas is tax compliance. Being prepared for this area when exiting an investment or a business — or seeking new investment — is tax underwriting data. Understanding what an investor/lender will seek and how to present it can save significant costs in an exit or refinancing.
All of these questions lead to a simple point: How does a company prepare itself for changes as well as recurring filing obligations? How does one optimise the workflow to reduce tax preparation, analysis and filing costs?
Our Approach
SIMPLICYTAS Readiness for Changes in Tax Rules include:
- Determine what data is necessary in order to analyse the impact of oncoming tax law changes
- Prepare such data in a way that minimises the cost of engages professional tax advisors to assess the potential impact of such law changes as well as the steps that might be taken to minimise the impact
- Prepare data in the format required by tax compliance providers to minimise cost and expedite return preparation
The key benefit of SIMPLICYTAS Readiness for Changes in Tax Rules services are to allow a company to be ready to react to changes in the tax environment, to provide information to its advisors without additional operational costs, service fees, or engagement with the providers themselves to provide such information. Preparation of this information is often a significant additional cost during tax preparation season or when tax rule changes need to be analysed.
Building these data structures into ordinary reporting and accounting processes can create significant savings versus ordinary processes. These data extraction and organisation services are otherwise significant sources of fees for the tax service providers.
