Branch operations and accounting. Increasing agility in a global market place

Transcription

1 and acconting Increasing agility in a global market place

2 Contents Introdction Are branch operations relevant to yo? How FAAS can add vale Contacts Notes of OECD BEPS Glossary Team Appendices

3 Introdction

4 Introdction Mltinationals do bsiness in varios contries sing mltiple operational strctres, both formally and informally. Formal operational strctres can be identified by a physical presence and typically contain one or more of the for setps: Legal entity Branch Partnership Permanent establishment (PE) bsiness driven verss tax driven Informal operational strctres can be identified by a management or operational virtal strctre, where people may sit across geographies, across the formal operational strctres and be groped by activity or bsiness. Page 4

5 Introdction Mltinational companies (MNCs) are looking to change their way of working, inflenced by the fast-changing environment and new possibilities to have a global footprint. The MNCs may operate throgh: Traditional by-sell models Direct sales models Direct manfactring models MNC margin management across its total vale chain Digital economy Others We typically see a change in approach by cstomer type: Bsiness-to-bsiness Bsiness-to-consmer Page 5

6 Introdction One can set p a branch from scratch (green field) or convert a legal entity into a branch (brown field). Varios stakeholders need to be involved to design the branch in a way that it can operate efficiently and effectively. The work streams that need to be considered in either a green field or brown field branch operations setp are: Project management Corporate governance Change management Direct tax Major program transformation Transfer pricing (TP) Bsiness processes (sorce or procre to pay, plan to prodce, inventory to flfil, order to cash, record to report) Intercompany effectiveness, inclding finance and acconting Indirect tax (VAT, cstoms, excise, other) Legal and reglatory Hman capital Information technology Location advisory As can be seen from these two introdction slides, setting p a branch (either green or brown field) reqires a strctred, mltidisciplinary approach to get it right. EY Operating Model Effectiveness (OME) and Financial Acconting Advisory Services (FAAS) teams have a tested and proven approach on how to spport yo in grop transformation, finding the right balance in yor new grop strctre between legal entities and branches. Page 6

7 Impact area RACI fnctional design Expat mobility management PE risk management Roles and responsibilities People policies Job descriptions Performance management Improved organizational design Simplified and relevant corporate strctre Better organizational plan and p-to-date strategy Updated docmentation Procre to pay Plan to prodce Inventory to flfill Order to cash Accont to report Improved IT setp inclding legacy Master data soltions IT process flows to be Vale-added tax or cstoms transaction matrix IT tax control framework Bolt on systems integration Design Bsiness processes Internal control design and framework Internal control policies and procedres Improved control Risk management process Internal adit fnction alignment Improved management reporting process Integration of financial and management acconting systems Improved KPI management Better standard setting and monitoring People (Hman capital) Internal control Management or forecasting Planning, bdgeting and forecasting Bdgeting control framework Bdget to actals management Sales and operations planning Transactional TP setp Bdgeting or forecasting Impact of branch operations Transfer pricing IT systems Corporate governance TP and IP planning Financial transactions TP docmentation TP control framework TP atomation Compliance Controversy management Direct and indirect tax; cstoms Finance and acconting Critical controls KPI management IT controls procedres GAAP adit trail BEPS adit commnication Compliance Director s liability PE risk management Effective tax rate management Tax control framework Transaction map from as is to to be Licenses and permits Prodct qalification Cstoms planning Intrastat, Extrastat, EC sales listings Cash flow planning Global chart of acconts Finance and acconting close process and shared service centers Stattory and tax GAAP Integration of financial and management acconting systems Fnctional crrency Treasry management Page 7

8 Impact area Clod and digital Virtal and informal PEs PEs PEs Branches Branches Branches MNC Regional and central entrepreners Sbsidiaries Partner Partner Partner Virtal and informal Clod and digital Page 8

9 Isses entities are facing today Decentralization of control Entities with decentralized management strctres and with a relatively large nmber of local sales companies have difficlties with strengthening central governance and control, and streamline their vale chain. For sch organizations, a lean and efficient operational model is essential to stay ahead of competition. Measring profitability Insfficient transparency and ambigity in the allocation of revenes and costs in the vale chain reslt in an inaccrate view on profitability of sbsidiaries and prodcts. This may lead to sboptimal decision-making and incorrect portfolio management. Allocation of risks Complex grops with nmeros local legal companies in the organizational strctre can be exposed to higher risk embedded in the strctre becase of local compliance isses. Complexity with reporting High-cost strctre The demand for more freqent and detailed management and financial reporting is growing becase of margin pressre and the desire to meet all stakeholders expectations. Frthermore, companies have to stay compliant with changing external financial reporting reqirements (e.g., IFRS 15) as well as local stattory and consolidation reqirements. Decentralized acconting and control departments often lead to excessive administrative processes and high finance costs. These can be redced by creating central fnctions and changes in the organization strctre. Sch measres can help to achieve the cost redctions that are necessary in a market place, reslting in a redction in margin pressre as well as increased competitiveness. Page 9

10 Why EY Becase of the ongoing globalization and fast-changing bsiness environment, companies and grop strctres are becoming more and more complex day-by-day. Strengthening controls, redcing cost, increasing efficiencies and adding vale reqire companies to have a global foot print. Being global has its own challenges and companies are always searching for an ideal corporate strctre. To remain agile and cstomer focsed, more and more companies are focsing on setting p or converting to local branches instead of sbsidiaries. This allows a company, for example to deploy a cross-border direct sales strategy or to cope with negative sales-related tax cash flow impacts in some other contries. Other reasons for setting p branches inclde excessive local reporting reqirements, lack of control and increased complexities de to a local presence as a stattory company. EY s mltidisciplinary team drawn from reporting, acconting, conslting and tax professionals can spport yo in grop transformation, finding a better balance in yor new grop strctre between legal entities and branches. Page 10

11 Are branch operations relevant to yo?

12 Critical criteria if one or more answer is yes, then it is relevant to yo Qestion Self-assessment Yes Partially No Do yo have branches in yor company? Do yo have mltiple (strategic) bsiness nits in one legal entity? Do yo have a digital channel throgh which yo sell prodcts, software and services? Have yo identified a PE of one legal entity in another contry? Is there a PE for indirect tax compliance in a contry? Is there a PE for direct tax compliance in a contry? Do yo have tax adits on deemed PEs in a contry? Does yor transfer-pricing docmentation contain a branch? Does yor transfer-pricing docmentation contain a PE? Do people who are critical for a global, central or regional entreprener (principal) sit in another legal entity or branch? Do yo have people who work on projects cross-contry or cross-region? Do yo have tax rlings in contries yo operate in? Page 12

13 Critical criteria if one or more answer is yes then it is relevant to yo Qestion Self-assessment Yes Partially No Do yo have advance pricing agreements in contries yo operate in? Do yo have yor people spport yor processes that have been otsorced to third parties? Do yo have special prpose vehicles? Do yo have off balance sheet items? Are yo contemplating a legal entity rationalization? Are yo contemplating a direct sales model in yor Region throgh one central entity? Are yo contemplating to start operating throgh branches in the contries yo (want to) operate in? Do yo have an acconting assessment for operations where it is assessed there is no sbstance? Will yo be affected by the BEPS action items, inclding contry-by-contry reporting? Page 13

14 How FAAS can add vale

15 The benefits of working with FAAS Yor objective Managing (intercompany) bsiness effectively, in a compliant way which drives bsiness vale throghot the vale chain Benefits of working with FAAS FAAS can spport yo to achieve: Efficiency throgh improved exection and control of intercompany trade Bsiness vale throgh a review of systems and processes Improved compliance procedres throgh focs on material compliance Sample benefits classification and definition depending on fact pattern Efficiency 1 Simplified, systemized and standardized operational, financial and tax processes Simplified and standardized transaction flows Redced transaction processing times Redced errors and time spent dealing with nonconformities Redced data gathering and processing time throgh one consistent data base for bsiness and tax Redced time on month-end and year-end closres, and internal price discssions Bsiness vale 2 Better information for decision-making throgh greater transparency and more reliable data Clear governance model inclding roles and responsibilities Cross-fnctional approach to enhance delivery of process objectives Better alignment of transfer pricing with KPIs to drive goal congrence, stimlate inter-company trade and redce lost sales Better alignment of entity classification with economic contribtion Redced bsiness disrptions de to missing prices, approvals, etc. Tax risk and compliance 3 Integrated bsiness and tax approach to delivering compliance facilitates seamless cooperation and avoids srprises dring tax adits More robst transfer pricing that aligns with performance measrement and redces scope for sbstance style challenges Strong margin management and profit split allocation processes to deliver the right reslts Redced time spent on TP docmentation and compliance Page 15

16 How FAAS can help How FAAS can assist yo EY can assist with changing the transformation of the financial acconting process and can help yo with the acconting aspects of the restrctring. Change in the grop strctre and inclding new type of entities i.e., branches as compared to local companies Balance sheet (e.g., eqity, fixed assets, inventory, acconts receivable (AR) and acconts payable (AP)) Change in the financial reporting process Transition to branch financial statement Change in governance style and strctre Carve-ot services EY teams can work across borders to help yo nderstand the local reporting reqirements and help compile into a dashboard. In addition, we can spport the training of yor teams in IFRS and local GAAP as appropriate. Certain of or services for an adit client and its affiliates may be more limited in order to comply with applicable independence standards. Please reach ot to yor EY contact for frther information. Page 16

17 Elements applicable to OME projects Elements Global and local chart of acconts, inclding IT and compliance reqirements Service FAAS can assist in the assessment of new cost systems or models, inclding: cost definitions and allocations for management performance and economic performance evalation, pricing, transfer pricing, inventory valation, chart of acconts and stattory reqirements. Balance sheet acconting and valation (pls accrals and provisions) FAAS can assist with the preparation and presentation of financial statements inclding the balance sheet and other elements. FAAS can also assist in the valation of the financial elements inclded in the financial statements in light with IFRS, US GAAP and other local GAAPs. Income statement acconting and revene recognition FAAS can assist with the preparation and presentation of the income statement. Under IFRS, revene recognition is going throgh significant change and FAAS can assist in implementing the changes. FAAS can assist with the implementation of the new standard, IFRS 15. Page 17

18 Elements applicable to OME projects (contined) Elements SOx segregation of dties, internal controls, inpt and otpt controls, programmed procedres, governance model (policies, procedres, labor contracts and job descriptions) Impact on internal and external adit Transfer pricing at managerial level with an adit trail to local stattory compliance level Service FAAS, working with colleages from across EY, can assist with acconting spport on the design, implementation and maintenance of acconting policy manals or individal policy pdates, inclding internal management reporting policies (i.e., KPI definitions). FAAS can also assist in the assessment of companies policy governance processes and with policy process design. FAAS can help provide acconting and financial reporting services with financial statement adit readiness. Sch services inclde assisting these clients in preparing financial or other information reqired for an external adit, reglatory or tax review. FAAS can assist in resolving observations and findings of the company's internal aditors to help enhance internal control procedres. FAAS can assist in the assessment of new cost systems or models, inclding pricing and transfer pricing. Page 18

19 Contacts

20 Financial Acconting Advisory Services Contacts Alex Wijnen OME Prof.dr Bert Steens FAAS Rowdy Liesker OME Babar Khan FAAS Ken Akaishi Japan FAAS Page 20

21 Glossary

22 Glossary Abbreviation AP APA AR BEPS BOM CAPEX CbC CFC CFO CM COA CWI DEMPE DPT EC ERP ETR EU F&A FAAS FMCG GAAP HQ HR IAS IBP ICE IFRS IP Definition Acconts payable Advanced pricing agreement Acconts receivable Base Erosion and Profit Shifting Bill of materials Capital expenditres Contry-by-contry Controlled foreign company Chief Financial Officer Contract manfactrer Chart of acconts Commensrate with income Develop, enhance, maintain, protect and exploit Diverted profit tax Eropean Commnity Enterprise Resorce Planning Effective tax rate Eropean Union Finance and acconting Financial Acconting Advisory Services Fast moving consmer goods Generally Accepted Acconting Principals Headqarters Hman Resorces International Acconting Standards Integrated bsiness planning Intercompany effectiveness International Financial Reporting Standards Intellectal property Abbreviation Definition IPO Initial Pblic Offering IPSAS International Pblic Sector Acconting Standards IT Information technology KPI Key performance indicator LRD Limited risk distribtor MLRD Master limited risk distribtor MNC Mltinational company NPS Net promoter score OECD Organisation for Economic Co-operation and Development OME Operating model effectiveness OTD Order-to-delivery P&L Profit and loss PBF Planning, bdgeting and forecasting PE Permanent establishment POC Principal operating company R&D Research and development RACI Responsible, accontable, conslted, informed a framework of docmenting roles and responsibilities S&OP Sales and operations planning SGA Selling, general and administrative expenses SKU Stock keeping nit SME Sbject matter expert SOX Sarbanes Oxley SSC Shared service center TM Toll manfactrer TP Transfer pricing UN United Nations VAT Vale-added tax Page 22

23 Appendices

24 Appendix 1 scenarios

25 Definition of a branch There are a nmber of definitions of a branch, for example: Tax perspective In local taxable presence of a parent company (sch as a Principal or Master LRD company) which from a direct tax perspective is characterized as a PE pt method (e.g., cost incrred) Acconting perspective IFRS do not explicitly define a branch, bt in practice, it has been noted as an extension to the parent company present right to payment. IFRS does not explicitly define a branch, bt in practise it has been noted as an extension to the parent company. Page 25

26 Definition of a branch IAS and IFRS definition of a branch IAS 21 Foreign operation is an entity that is a sbsidiary, associate, joint arrangement or branch of a reporting entity, the activities of which are based or condcted in a contry or crrency other than those of the reporting entity. IFRS 3 An integrated set of activities and assets that is capable of being condcted and managed for the prpose of providing a retrn in the form of dividends, lower costs or other economic benefits directly to investors or other owners, members or participants Page 26

27 Branch operation vs. sbsidiary strctre Company strctre Branch strctre Parent POC NL BV 1 GER KG FR Sàrl UK Ldt. 1 Lx Sàrl CH AG Local Branch NL Local Branch France NL BV 2 GER GmbH EU UK Ldt. 2 Non-EU GER GmbH A few high-level advantages of a branch: Company strctre Branch strctre Local eqity acconts Head office or branch office crrent acconts Local company has title or ownership of assets POC can also owns the assets Complex consolidation process Simplified consolidation Inter-company transactions and eliminations Limited inter-company eliminations Inter-company profit eliminations Branch being an extension of the parent will not attract intercompany company profits Page 27

28 Branch operation verss sbsidiary strctre (contined) POC Sbsidiary Policies and procedres Independent entity and local cstoms and laws can motivate varying policies and procedres to be adopted. Financial reporting reqirements Sbsidiary being a locally registered company, might be reqired for independent preparation of financial statements and adit there on.* Carve-ot or closre Closing a sbsidiary reqires a formal procedre (winding-p, striking off, or the appointment of a liqidator). Efficiency measrement Local management wold be motivated to increase profit as being the benchmark for efficiency, where as, they might not being able to inflence either the price or cost of the final prodct. Contractal arrangements Local sales or procrement contacts might be needed and may vary from one sbsidiary to another in the strctre. Tax considerations Tax considerations might be there and considering a local company wold also qalify as a PE of the POC. Transfer-pricing polices are needed to operate with grop entities. Branch Policies and procedres Part of the parent company and therefore can be reqired to follow similar policies and procedres. Financial reporting reqirements It might be sfficient for the branch to frnish POC s financial statements for local filing and this can avoid local financial statements and adit procedres.* Carve-ot or closre A branch is easier to wind p or carve ot when the need is over. Efficiency measrement Local management can be compensated for their efforts in creating sales with a standard formla. KPIs cold be market focsed. Contractal arrangements Sales and procrement contract cold be central, and similar terms and conditions cold be applied for varios geographical regions. This cold work qite well especially in the EU. Tax consideration With carefl analysis of the definition of PE, local existence can be planned effectively. Limited or no transfer pricing reqired as the branch wold be an extension of the parent. * Depending on the local laws and reglations Page 28

29 Types of possible branches Finding an appropriate option Fnctional branch What is a fnctional branch? A fnctional branch wold be an entity in the grop strctre with limited local presence and wold inclde entities which have limited fnctionality, e.g., sales agents, service centres. Relationship with the POC POC wold have more control of the entity. POC can direct policies. Entity can se POC s financial statements for local filing. Contract can be carried in the name of the POC. How wold this effect the acconting going forward? Limited acconting needs Assets inclding property, plant and eqipment and inventories cold be held on behalf of the POC Transactional branch What is a transactional branch? A transactional branch wold be an entity in the grop strctre with more local presence. The branch wold also have higher nmber of local employees and wold be liable for income taxes or social secrities in the contry of the branch. Relationship with the POC Contracts with external parties are also maintained by the POC. Transactional branches actively take part in a company s end-to-end spply chain process. They are, for example, the face to the client on behalf of the principal and are a part in the (crossborder) goods movement process. How wold this effect the acconting going forward? As the entity wold be responsible for local taxes, assets inclding property, plant and eqipment and inventories shold be held by the branch to facilitate appropriate tax acconting. Page 29

30 Transformation of a sbsidiary into a branch Sbsidiary Branch Transformation change in entity stats and the grop strctre Steps to convert a sbsidiary into branch operations Step 1: Wholly owned sbsidiary Restrctring the grop entities and consideration as a common control transaction Transferring of all the assets and settling all the liabilities of the company as a common control transaction Transferring of assets available in the sbsidiary to the branch (which is against the eqity held as investments) Assets can later by sed by the branch Step 2: Partly owned sbsidiary In addition to the steps for the wholly owned sbsidiary above, the share (non-controlling interest) in the company held by third parties wold need to be acqired. These cold be treated as acqisition of non-controlling interest as part of a common control bsiness combination. Step 3: Legal actions Winding p the sbsidiary Setting p a branch operations as an extension of the parent Step 4: Post restrctring acconting Post-restrctring, the parent and branch wold maintain crrent acconts with each other and those cold be sed to settle the transactions between both the nits of bsiness. Reqirement of new acconting standards like IFRS 15 and IFRS 9, wold need to be frther considered on the basis of the new strctre of the bsiness nits. Page 30

31 Formation of a new branch No presence Branch New start creating new branches in the grop strctre Steps to convert a sbsidiary into branch operations Step 1: Wholly owned sbsidiary Transferring and procrement of assets for the branch Initial recognition of assets and creation of opening balance sheet Branch or head office crrent accont to be created Step 2: Legal actions Compliance with local reglatory reqirements inclding, bt not limited to, taxation and reglatory reqirements Setting p a new branch operations as an extension of the parent Step 3: Post establishment acconting Post establishment, the parent and branch wold maintain crrent acconts with each other and those cold be sed to settle the transactions between both the nits of bsiness. First version of the financial statement needs to be prepared (both for the branch separately* and the consolidated F/S) Reqirement of new acconting standards like IFRS 15 and IFRS 9, wold need to be frther considered on the basis of the new strctre of the bsiness nits. * Depending on the local laws and reglations Page 31

32 Reorganization or merger of two or more sbsidiaries Two or more branches Branch Reorganization merging entities to an improved grop strctre Steps to convert a sbsidiary into branch operations Step 1: Wholly owned sbsidiary Restrctring the grop entities and considering this as a common control transaction Transferring of all the assets and settling all the liabilities as a common control transaction to the parent entity and later being sed by the branch. Assets available have to be transferred to the parent against the eqity held as investments. These assets can later be sed in the merged branch operations. Step 2: Legal actions Closre of the old branches Setting p a new branch operations as a extension of the parent. Step 3: Post restrctring acconting Post-restrctring, the parent and branch wold maintain crrent acconts with each other and those cold be sed to settle the transactions between both the nits of bsiness. Reqirement of new acconting standards like IFRS 15 and IFRS 9, wold need to be frther considered on the basis of the new strctre of the bsiness nits. Page 32

33 Benefits of a branch With branches in the grop strctre, entities can: Respond better to market circmstances Achieve cost redction by removing redndant fnctions Increase efficiency by focs on core activities Better control on fnctional management de to less complexities at branch operations Achieve better control from the head office or central company s perspective Achieve better policy and process alignment within the grop Redce reporting reqirement (on the basis of the local reporting stattes and reqirements) Mitigate tax permanent establishment (PE) risks Enhanced and robst docmentation of the transformation process inclding: Acconting and reporting process for the new strctre Acconting policy manal with entity specific policies and procedres Robst governance strctre Roles and responsibilities for the new strctre Page 33

34 Challenges and considerations Challenges Considerations Local reporting reqirements System reqirements Acconting impact Balance sheet (e.g., eqity, fixed assets, inventory, acconts receivable (AR), acconts payable (AP)) Cost allocation Movement of stock Reconciliation Intercompany price setting (prodcts sold throgh branch or sold directly) Sbstance Level of control (governance) Profit allocation KPIs Legal (e.g., reglatory licenses) Acconting Payroll Liability Assets Inventory Consolidation and reporting Working capital management Financial arrangements Tax OECD model convention Doble taxation or loss of bsiness tax dedctions System Treatment of branches in varios systems Legal Liability IP ownership Page 34

35 Specific acconting gidance Assets of an entity IFRS framework paragraph 4.4 An asset is a resorce controlled by the enterprise as a reslt of past events and from which ftre economic benefits are expected to flow to the enterprise. Liabilities of an entity A liability is a present obligation of the entity arising from past events, the settlement of which is expected to reslt in an otflow from the entity of resorces embodying economic benefits. The concept gides to the decision as to which level, in a strctre an asset or liability shold be recorded, recognised or managed. Para 4.6 the framework states the following: In assessing whether an item meets the definition of an asset, liability or eqity, attention needs to be given to its nderlying sbstance and economic reality, and not merely its legal form. Therefore, even when the assets are legally held by a branch, in sbstance they cold be in se of the POC. Page 35

36 Specific acconting gidance The Conceptal Framework for Financial Reporting Para 4.29: The definition of income encompasses both revene and gains. Revene arises in the corse of the ordinary activities of an entity and is referred to by a variety of different names inclding sales, fees, interest, dividends, royalties and rent. Branch bys stock directly Branch bys on behalf of the parents and the assets sed or sold as per the fnction of the branch. Revene from the sale of goods shall be recognized when all of the following conditions have been satisfied: The entity has transferred to the byer the significant risks and rewards of ownership of the goods The entity retains neither contining managerial involvement to the degree sally associated with ownership nor effective control over the goods sold The amont of revene can be measred reliably It is probable that the economic benefits associated with the transaction will flow to the entity The costs incrred or to be incrred in respect of the transaction can be measred reliably Page 36

37 Bsiness scenarios By and sell stock transfer (raw material or capex) Principal bys stock on behalf of branch Central procrement fnction within the grop and the POC transfers the asset to the branch. Branch bys stock directly Branch bys on behalf of the parents and the assets sed or sold as per the fnction of the branch. Direct sales (finished prodct) Principal sells stock on behalf of branch Branch prodces good on behalf of the POC and POC makes the sale to third parties. MRLD sells stock on behalf on branch An intermediately entity is established and that entity procres from the branch and sells on behalf of the parent. Branch sells stock directly Branch sells directly to third parties bt on behalf of the parent. There is an agent or principal relationship. Branch toll manfactring In this case, the branch manfactres on behalf of the POC and can be setp as a manfactring nit. Page 37

38 Appendix 2 Notes of OECD BEPS

39 Key aspects of BEPS The OECD lanched its BEPS project in Febrary 2013 addressing 15 focs areas described in OECD s Action Plan on BEPS. The BEPS project addresses OECD and contry concerns abot the potential for MNCs to redce their tax liabilities by arbitrarily shifting income to no- or low-tax jrisdictions. Developments impacting the crrent international tax environment In October 2015, OECD issed its final deliverables to conter BEPS. Reslts of the work is reflected in a variety of forms, inclding: Reports and analysis Changes to the OECD model tax treaty, transfer-pricing gidelines and related commentaries Development of a mltilateral instrment to amend existing bilateral treaties Recommendations for changes in domestic tax law to be considered and adopted by participating contries Other governments and international bodies, e.g., the UN and the EU, have proposed changes to international tax rles that are closely linked to the BEPS project. Many of the BEPS action items and contries tax legislative developments may impact traditional spply chain (OME) and intangible property (IP) strctres, particlarly where PEs are sed. Page 39

40 BEPS impact Action 2: Netralize the effects of hybrid mismatch arrangements Action 3: Strengthen CFC rles Action 4: Limit base erosion via interest dedctions and other financial payments Action 6: Prevent treaty abse Action 7: Prevent the artificial avoidance of PE stats Action 1: Address the tax challenges of the digital economy Action 8: Consider transfer pricing for intangibles Action 9: Consider transfer pricing for risks and capital Action 10: Consider transfer pricing for other high-risk transactions Action 13: Re-examine transfer pricing docmentation Action 5: Conter harmfl tax practices more effectively, taking into accont transparency and sbstance Action 11: Establish methodologies to collect and analyze data on BEPS and actions addressing it Action 12: Reqire taxpayers to disclose their aggressive tax planning arrangements Action 14: Making dispte resoltion mechanisms more effective Action 15: Develop of a mltilateral instrment for amending bilateral tax treaties Direct Impact Indirect Impact FAAS core competencies Page 40

41 EY Assrance Tax Transactions Advisory Abot EY EY is a global leader in assrance, tax, transaction and advisory services. The insights and qality services we deliver help bild trst and confidence in the capital markets and in economies the world over. We develop otstanding leaders who team to deliver on or promises to all of or stakeholders. In so doing, we play a critical role in bilding a better working world for or people, for or clients and for or commnities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Yong Global Limited, each of which is a separate legal entity. Ernst & Yong Global Limited, a UK company limited by garantee, does not provide services to clients. For more information abot or organization, please visit ey.com EYGM Limited. All Rights Reserved. EYG no GBL BMC Agency GA_ ED None In line with EY s commitment to minimize its impact on the environment, this docment has been printed on paper with a high recycled content. This material has been prepared for general informational prposes only and is not intended to be relied pon as acconting, tax, or other professional advice. Please refer to yor advisors for specific advice. ey.com