Reducing The Tax Gap Brochure


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Reducing The Tax Gap Brochure

  1. 1. in collaboration withTax & Revenue Management– Reducing the Tax Gap
  2. 2. Introduction & Context Tax agencies are agents of change Consider these facts: within the public sector, responding • Taxes (income, sales, property, fuel, to citizen-focused government estate, etc.) are typically the single pressures that stem from a highest component of government combination of constituent-led revenues. demand, compliance pressures and • Revenue-generating, citizen-facing political mandates. Throughout the agencies like tax agencies all have world, governments are being technology modernization strategies. challenged by citizens to deliver better, less costly and more customer- • Between 2000 and 2004 the UKs focused services. This requires ‘Corporation Tax Gap’ (the difference different channels for delivering between the expected rates of tax services to the citizen, fundamental that UK companies should pay and changes to government culture and what they actually paid) saw the top employee behavior and a new 50 UK companies paying around 30 consideration of the channels through billion euros less tax on their profits which services are delivered. than expected rates would suggest appropriate. Within this changing environment, • The tax gap according to USA’s tax agencies, as the ‘de facto’ banker Internal Revenue Service (IRS) is of government, have a central role to estimated to be over 250bn euros. play not just in collecting the taxes to fund public services but also as a key This is serious money. So finding citizen-facing organization. solutions that enhance citizen services while improving the collection of taxes has high urgency amongst tax agencies. In this paper we will explore the general trends and put forward the shared view of Capgemini and SAP on a solution to improve tax and revenue management and help tax agencies increase revenues and taxpayer compliance. We aim to help you to ‘mind the gap’ whether you’re looking at it from the perspective of a solid business case or as it fits in with societal developments and the new positioning of the tax department.2
  3. 3. Public Sector the way we do itWhat are the compelling pressures tax agencies face today?Governments – particularly those in high percentage of government service changing the way in which frontlineEurope and North America – are faced expenditures, so there is an and back office services are delivered.with a dilemma. Better services to the opportunity to seize this and use it to acitizen cost money, but the citizen is government’s advantage by: New technologies have alsono longer willing to pay more taxes to fundamentally changed the way inpay for these services. In addition, as • investing in new, less expensive ways which services, whether they are ineconomies globalize, businesses are to deliver frontline services to the the private or public sector, aretaking corporate tax rates into citizen, delivered. This has seen the channelsconsideration in their investment • looking at how they can create more of delivery moving away fromappraisals – in effect, governments effective back office, public traditional face-to-face contact to callhave to use corporate tax rates as a administrative functions for less cost, centers and the Internet. Technologymeans to compete with one another has created flexibility in how and • looking to where others can provideand so make their country an where services are delivered while services at a lower cost,attractive investment proposition. So offering new ways to take out cost.the revenue streams open to • embracing flexible and adaptivegovernment have become tighter – tax technology. Four Challenges Facing Taxrates cannot be increased, the Agenciestaxpaying population is decreasing Most countries are investing in Tax agencies cannot escape theseand within the EU the opportunities modernization programs, for example public sector challenges. A simpleto borrow are now more restricted. the “Modernisation de l’Etat” in France, way to look at this from the the “12 Golden Projects” of the Chinese perspective of a tax agency is shownBut it is possible to turn this challenge Central Government, the in the table below. There is aaround and see the opportunity to “Transformational Government” Agenda dilemma: reduce the tax gap whiletransform the way that governments in the UK, and the “President’s improving efficiency and being citizendeliver services. If the source of income Management Agenda” in the US. These friendly and at the same time goingis more restricted, then governments agendas have much in common. They through a new strategic positioninghave to reduce costs and increase are predicated on reducing cost, while the budget decreases.efficiencies. Typically staff costs form a investing in new technologies and Compliance Cost Efficiency Citizen-focus How to reduce the tax gap by: How to deliver the same level of service How to harness new technologies to: • making it as easy as possible to for less money, delivering genuine • deliver services to the citizen, when comply, efficiency gains not simply cost they want them and how they want • having the means to effectively tackle reductions. them, non-compliance. • make it easier for the citizen and businesses to comply with their tax obligations. Change These 3 challenges are underpinned by the transformational challenge: • Why have a tax agency in the 21st Century? • What business is a tax agency in and what is its new business focus? • What organizational structure is required? • What culture and behaviors are now expected from staff? • Does the tax agency have all the skills, capabilities and the capacity to step up to the transformational challenge? • Can the tax agency bring about change?Tax Revenue Management - Reducing the Tax Gap 3
  4. 4. These business challenges are not Globalization increases the challenges obligation only. All traditional valuesuncommon among most major tax of tackling non-compliance and are turned upside down. Agencies faceagencies where non-compliance, cost impacts the income a country receives the questions of how to organize,efficiency and changing services to through taxation. Essentially, as more what responsibility they have, andmeet citizen demands are the norm. economic activity globalizes the easier how to keep control of the newThis is because of the importance of it becomes to move money around decentralized data collectionthe tax agency as the government’s and to therefore avoid taxes. And in structures. Creating bespoke solutionsbanker and because taxation provides rapidly expanding economies, such as is out of the question: this takes toothe bulk of the income to enable a China, there is the added challenge of long and the flexibility that is neededgovernment to function. an entrepreneurial high income cannot be designed for – this is section of society which, when industrial knowledge that is notTax agencies have a responsibility to combined with a still largely cash- readily available. Agencies needreduce the gap between what ought to based economy, means tax avoidance insight to change and make that paid and what is collected as taxes. is much more likely. As an example of They must choose the integrator whoWith compliance for example, tax the impact of globalization look at the provides the necessary skills,agencies must bring in the right EU where new regulation will allow a capabilities and the capacity to stepamount of tax and therefore transporting firm to file an import up to the transformational change.undertake compliance activities where it likes – some countries willbecause some parts of the taxpaying see a large drop in revenues (levying The Components of Tax & Revenuecommunity are non-compliant (the import duties and VAT might go Managementso-called tax gap between what tax elsewhere). Within the tax administrationshould be collected and what is lifecycle, we see the business processactually collected). This can be caused As a result, agencies everywhere are of managing tax assessment, collectionby lack of insight, error-prone filing thinking about their position. New and enforcement as having nine broadand negligence, lack of follow-up or technical ways arise to collect taxes at elements – see Illustration 1.even intentional fraudulent actions. the source, which for instance means that filing afterwards is a formal But what Illustration 1 does not take into account is the complexity of tax and revenue management. CapgeminiIllustration 1: Discrete Steps of Tax Lifecycle and SAP have found that, typically, the government tax and revenue management lifecycle has many problems, including: Measurement • Single revenue type limitations with Accounting Registration, multiple systems, processes and Account Maintenance personnel for different taxes causing redundant data capture and adding to complexity. Most governments have Audits, Collect Tax Tax Inspection & Information dozens of tax and revenue types, Detection from sales, fuel, tourist development and rental car surcharges to convention development tax and Disputes & Appeals Returns Filing documentary stamps on deeds. And & Processing as tax becomes more and more an instrument of government policy in Payments, Filing Compliance the areas of environmental protection Collections and social wellbeing, the challenge is to quickly add new tax and revenue types to the tax system. 4
  5. 5. Public Sector the way we do it• Limited view of the taxpayer with These problems are exacerbated by ‘hard-wired’ into these applications to little or no single view of the the existing technological mimic a business process. However, taxpayer or the taxpayer’s total environment where most tax agencies once the business process requires obligation, resulting in lost revenue have large-scale legacy systems and some changes, these hard-wired and in some cases low compliance. have not been able to standardize systems now become prohibitively Tax agencies typically have different those systems. Most environments are expensive, as intense programming employees and systems to handle a combination of in-house developed, work is required to change the each tax type, with no single point custom-built, isolated islands of process. of visibility into a taxpayer’s overall automation. In many cases, the record. This leads to poorer multiple systems supporting multiple So when you bring all of these factors customer service, a lack of ‘single revenue types further increase the IT together the reality is that tax agencies view of the citizen’, customer data complexity. Why are custom, ‘one-off’ are faced with an environment which stored in multiple locations with no systems so problematic? When we is more like Illustration 2 than the easy detection of under and over- examine the way custom-built ideal of Illustration 1. The ultimate payments, and corresponding integration has evolved, the pain of such a disjointed environment problem resolution becoming complexity inherent in custom-built is uncaptured revenue and low difficult. integration slows progress and taxpayer compliance rates. The increases costs. At system level, the challenge is how to change this• Lower compliance, because risk logic needed between applications is environment. assessment is more difficult due to a limited visibility into taxpayers’ total obligations and status. In some tax agencies this leads to poor targeting of audit activities. Illustration 2: Pain Points for Tax Agencies• Low collection efficiency due to the higher cost of operations. Typically, Redundant systems Cannot measure revenue Legacy, custom- for each tax, we see a high ratio of cost relative to agency effectiveness, low built, disconnected revenue and revenue per dollar spent systems for each receivable type, revenue collection. Many tax Slow revenue step in tax lifecycle multiple sources of reconciliation to taxpayer data agencies now not only collect general fund Measurement money, but they make payments to Fragmented Accounting Registration, access for businesses and citizens alike in the Account taxpayers High taxpayer Maintenance form of refunds, grants and burden subsidies. This process can often be Audits, Collect Tax as inefficient as the collection Tax Inspection & Information Detection process. Single revenue Undetected and tax type• Difficulty in measuring effectiveness, fraud & tax evasion, low Disputes & Appeals Returns Filing limitations & Processing because with no consolidated view enforced revenues Limited view of of performance across various taxpayer processes, transactions, steps, Low collection Payments, Filing Compliance efficiency, high Collections interactions and data, it is difficult to cost of operations, Low voluntary High cost per return filed low payment have robust performance indicators tax compliance efficiency and revenues that can demonstrate real and genuine high quality business performance.Tax Revenue Management - Reducing the Tax Gap 5
  6. 6. Adding Complexity to this Environment:Financial Transactions in the Public SectorIllustration 3: An example of a transactional process Pre-transaction Transaction Fulfillment 8A. Customer 1A. Info 2A. Info 3A. 4A. 5A. 6A. 7A. actions Change self-serve request Register Transact Status Correct Appeal / of request error complain circum- stances 8B. Ack- nowledge 1B. Auto- 2B. Info 3B. Open 4B. Ack- 5B. 6B. Info 7B. Provider actions respond respond account nowledge Status request Trans- response action 9B. New result service infoIn our view, the complexity is not going • Where the state fulfils financial blend some of them. In theaway. Take for example the financial obligations to the citizen – for Netherlands and the United Kingdom,transactional functions of tax agencies example, payments of social security the tax agency is now also theshown in Illustration 3. In his paper “A benefits, unemployment benefits, provider of social security benefits toQuiet Revolution: Government’s agricultural payments and pensions. those in work. In Denmark, the taxTransactional Services”(1), Graham agency is responsible for vehicleWalker set out a simple generic • Where the state acts as a service registration and associated road taxes.mapping of the transactional process. provider (in some instances a In the United Kingdom, the Education monopoly service provider) and the Department sets the policy on studentFinancial transactions can be readily citizen purchases products or loans, a student loan companymapped on to this process and services from the state – for example manages the process and provides thetypically take place in the public passports, visas, discounted loans, but it is the tax agency whichsector for three main reasons: municipal travel passes and student acts as the loan recovery service. The loans and grants. Canadian Government has gone a step• Where the citizen fulfils financial further, aggregating all government obligations to the state – for In tax agencies these are typically the services that entail customer contact example, the payment of income debt management, banking and into a single department, Service taxes, municipality taxes, sales taxes, enforcement functions. But these core Canada, which is, by implication, excise duties, road taxes, fines & financial transactional services cut responsible for all accompanying penalties, health & social insurances. across the whole of the public sector financial transactions. and there is an emerging trend to(1) A Quiet Revolution: Government’s TransactionalServices, Graham Walker at the UK’s Institute of PublicPolicy Research 6
  7. 7. Public Sector the way we do it Table 1: Typical financial business processes and where they occur in the public sector Financial Process Tax Social Student Municipal & Security Funding Regional Govt Receivable & Payables Management Financial Accounting Collection, Debt Management & Enforcement Online Financial Services Financial Risk Management Loan Management Inter-Bank Clearing Business Intelligence Records Management So when we look across the public Public sector agencies with financial sector, we have found that there are transactional services need to look at significant overlaps in the functions the underlying processes and consider responsible for these financial if they are still fit for purpose. If they transactional processes (Table 1). are still highly manual processes, is this sustainable? If processes are going At a global level, the public sector is to move towards automation, then faced with real pressures to become they should be re-engineered first, to more cost efficient, but this can only avoid inefficiency creeping into the be achieved by innovative thinking in changed process and thereby what are generally seen as these more reinforcing higher cost. Technology mundane areas of the public sector. will be a critical enabler and so The barriers between the layers of solution sets will depend on Service government and between agencies Oriented Architecture (SOA) as well as have to be broken down. So there has on ‘out of the box’ or ‘commercial off- to be a move away from problem the-shelf’ (COTS) solutions that enable solving based on individual agencies, public sector agencies to introduce towards a pan-governmental approach standardized processes with cheaper (both centrally and locally) to meet standardized products. But for this to these challenges. succeed, it requires the IT market and vendors of standardized packages to We believe that there is a need for a provide solutions that are stable and fresh look at how financial scalable to ensure they have the transactional services are managed. confidence of public sector agencies.Tax Revenue Management - Reducing the Tax Gap 7
  8. 8. A Tax & Revenue Management Solution to Reducethe Tax GapThe SAP Tax and Revenue What are the problems associated Note that these problems are notManagement for Public Sector with non-standardized systems? isolated to the CIO, but impact thepackage is a holistic tax and revenue • Many existing tax agency IT entire organization, including theadministration solution that provides environments are comprised of executives, management and staffa single view of the taxpayer and stand-alone, custom-built, and/or within a tax agency. So given thesupports multiple revenue types, legacy systems that are literally severity of these problems, and thehelping tax agencies increase isolated islands of automation, each magnitude of the tax gap, how does acollections and maximize compliance. supported by separate staff for each standardized solution address theseIt is configurable, upgradeable, tax and revenue type. This fosters pains and problems?standardized, commercial off-the-shelf fraud and reduces compliant taxsoftware that supports the tax and payments because there’s no Illustration 4 below represents a viewrevenue management life cycle at visibility into taxpayers’ overall tax of how the SAP Tax and Revenuelower risk and cost than custom- and payment status. Management solution supports thedeveloped solutions. key business processes across the tax • High maintenance costs to update, and administration lifecycle. Note thatIn the United States, COTS means the integrate and adapt these systems the complexity, inefficiency andsame thing as “standardization” as with ever-changing technology redundancy of Illustration 2 are gone.used in other parts of the world, and advancements, or to change business This graphic represents the same taxis an acronym commonly used in the processes mandated by legislative and revenue lifecycle but with thepublic sector. Both COTS and action or constituent demands improvements and benefits deliveredstandardization refer to things one can by SAP to tax (for sale) from a provider that are • Poor customer services forpre-integrated and available for taxpayers, who must communicate Each of the green boxes represents adeployment. These deliver more with separate offices for each tax capability and benefit that SAPavailable functionality, while lowering type or fee and have to cross delivers to the tax agency, associatedthe risk of both initial and ongoing organizational boundaries to solve with the pains and problems fromcosts of custom-developed solutions. problems. Illustration 2. Illustration 4: Benefits of the SAP Tax & Revenue Management Solution Demonstrate public Standardized solution connecting the tax accountability, increased revenue & revenue management lifecycle process per dollar spent Accelerate revenue reconciliation to Florida: 2nd year ~15% Provide multiple taxpayer general fund access points Revenue Accounting, Support Performance multiple tax, Foster Benchmarking Registration, revenue and “constituent” Account Maintenance receivable oriented and Service Support Audits, Inspection types service & Detection, Florida: 49 Taxpayer Case types; 95% of Management all taxes Online Forms, eFiling, Returns Higher enforced revenues, Processing increased % of Collections receivables Offer “single view of & Disbursements Filing Compliance taxpayer” across tax collected types and tax lifecycle Florida: 2nd year ~ 2% Collect money faster, lowered cost of Improved voluntary Lowered cost per operations, make payments faster tax compliance and return filed revenues Florida: 2nd year Florida: 2nd year (~4%) Florida: 2nd year ~10% (~15%) 8
  9. 9. Public Sector the way we do it First, SAP provides multiple taxpayer validation of return data; while the An example, in the case of the access points that help speed up, self-service portal allows 24/7 Florida Department of Revenue simplify and reduce barriers to management of taxpayer accounts and (FDOR), USA, increased voluntary taxpayer interaction by integrating lowers administrative and paper compliance revenues by ~ 10% within the second year of communication channels and processing costs. implementing SAP. Making it easier providing ‘one-stop’ registration and to pay and allowing multiple account maintenance capabilities. Fifth, voluntary compliance is payment methods and supporting Some examples include contact via a improved by streamlining processes single/multiple payments on sum of taxpayer portal, telephone, email, through a one-stop collection screen all obligations, contributes to face-to-face and fax. This integrated detailing taxpayer obligations, status, accurate and timely billing. This online registration process ensures case documents, payment history, etc. lowers the cost per dollar collected that complete and up-to-date taxpayer In public sector value terms, through accurate, timely and information is included in the increasing or maximizing voluntary automated billing and collection automated follow-up processes such compliance means maximizing the processes. as taxpayer validation and back office ratio of taxpayers who complete their The FDOR also lowered operating processes like fee collection. tax returns in compliance with the costs by ~ 3% by the second year of law, file and then pay the full amount implementing SAP. Secondly, SAP TRM supports many on time. This capability increases The FDOR uses SAP to support over tax, revenue and receivable types voluntary compliance by simply 49 different tax types, representing across the tax and revenue lifecycle, ensuring that people are aware of 95% of all Florida State taxes. such as taxes, permits, licenses, tolls, what they owe. duties, etc. This is particularly important as tax agencies consider Sixth, with integrated taxpayer case providing revenue collection services management, tax agencies can achieve within and across the government higher enforced revenues and organization. SAP’s single, unified, increased “percent of receivables integrated solution can flexibly adapt collected”, while reducing tax revenue to changing tax rules and laws and leakage and maximizing tax recoveries. can easily add new tax types and tax Tax agencies can accurately select schemes. cases for audit and quickly determine treatment streams for collection. Thirdly, a single view of the taxpayer Agencies can manage, track and report shows the taxpayer’s total obligation, on the activities, appeals, ruling and both to the taxpayer and the results of investigations to ensure government agency, regardless of enforcement and compliance. Money communication channel or tax type. not collected within 90 days is much This helps to capture additional more difficult to collect, but by using revenues and improve voluntary Business Intelligence to focus on compliance. efficient collection methods, and deciding when to pass receivables to Fourth, multi-channel filing and collection agencies, tax departments eFiling lower costs per dollar collected increase the chance of collection and reduce processing costs via on- success. A single view of receivables line filing and taxpayer self-service allows the taxpayer’s agent to more access capabilities, along with linked efficiently assess and act on doubtful image retrieval so taxpayers and accounts across tax regimes. Integrated employees can quickly access call center capabilities improve documents. eFiling and online efficiency and effectiveness through payments provide pre-populated this consolidated view of receivables. fields, real time calculation andTax Revenue Management - Reducing the Tax Gap 9
  10. 10. Seventh, by providing the taxpayer Finally, built-in business intelligence The SAP solution also helpswith a single point of contact, helps demonstrate public synchronize multiple sources ofgovernments foster improved accountability and operational taxpayer data, whether it’s captured inconstituent-oriented services. Tax transparency. Tax agencies can track the federal or central government taxagencies can quickly post payments and measure against specific KPIs and departments or even in social serviceand returns to taxpayer accounts, and performance metrics, such as departments. For example, eithergenerate refunds on a timely basis. increased revenue per dollar spent, constituents have a job (tracked byMulti-channel enablement and score against internal service the tax agency) or they depend onknowledge management ensure standards (such as first-call response, support from the Governmentenquiries that are answered process x% of returns by deadline, (Department of Health and Humanconsistently and on the first contact. etc.), ‘cost per dollar collected’, or Services). Or other agencies from bothActivity management ensures that ‘number of taxpayer cases closed’, the federal and state or local levelenquiries levels are met and builds a ‘cost per return filed’, ‘% of electronic depend on these databases. SAP’scomplete taxpayer history. Outbound filing’, ‘dollars collected per revenue Master Data Management (MDM)campaigns allow proactive education agent’, ‘tax cases closed per revenue capabilities help keep taxpayer data inof taxpayers to improve voluntary agent per month’, ‘average days to synch, to maintain a ‘single version ofcompliance, and segmentation ensures issue refund’, ‘% of returns filed the truth’ and ensure master datathe targeting of only relevant electronically’. consistency across disparate systems.taxpayers. Each agency needing to access SAP provides a standardized tax and taxpayer data, whether it is the localEighth, integrated financial revenue management solution that tax, social services, housing agencymanagement accelerates revenue unifies and automates the entire tax etc, can do so. This fosters inter-reconciliation to the general ledger, lifecycle, from registration through departmental processes to maximizeand lowers the time for financial remittance processing and audits to government efficiency.reconciliation and closing, while revenue posting and distribution. Thisspeeding up revenue distribution to avoids the cost and inefficiency of The ultimate value of the SAP Tax andsupport government programs and multiple, redundant, custom-built, Revenue Management solution is thatservices. legacy and/or stand-alone systems. it helps tax agencies increase revenues Each step along the tax and revenue and taxpayer compliance. This management lifecycle is linked and promise is built upon the capabilities integrated to the other, resulting in and benefits identified in the unified data stores, complete taxpayer preceding pages. records, and efficient services. SAP’s COTS solution delivers more available From a business perspective, there is a functionality than custom-built fit between the wide offering and systems, while lowering the risk and experience of SAP for tax agencies and cost of custom-developed solutions. the experience of Capgemini to Such solutions help tax agencies implement the solution and manage remain current with new technology, the change process to a 21st century provide standardization across the agency. enterprise, and avoid the high costs of custom-built solutions, while supporting adaptable configuration to changing business rules and ever- changing tax policy.10
  11. 11. Public Sector the way we do itThe Concept behind SAP Tax and Revenue Management The standardized Tax and Revenue •Rules determine how the accounting • Tax Rules are shared between solution from SAP has been designed postings take place, and incorporate mass handling processes and the with a specific approach in mind: to automatic handling of changes when manual handling process so, there allow flexibility to better follow events occur in the life of a citizen is no confusion about which rule taxation demands as they arise. The or company. All changes and is valid. benefits that come from a unified corrections are booked and are • Tax Objects are shared between taxation platform are based on the always linked back to the original tax types so, there are no capability to make the framework postings. redundancies in data. behave in the way that fits the tax regime and future plans. The way SAP uses rules in the TRM • Changes in circumstances can be business component offers a high degree automatically evaluated for their To be able to do this, processes must of flexibility in taxation. TRM is an open impact on current or even old make use of common services and platform that can be adapted and taxes. These events can trigger standard transactions. It also points in adopted to levy any type of tax or even handling in more than one tax another direction. Governance takes a for providing subsidies. By being able to type. central position in the design. SAP manage the transient models and ever- TRM can easily be configured to adapt changing parameters of a tax regime, • Tax payers have the possibility to use on-line and interactive to changing business rules and ever- TRM can closely track the political electronic forms to file their taxes changing tax policy. It allows a short decision-making cycle on regulations so the burden of complying with implementation time for new tax rules and taxation rules. In this way, SAP TRM tax ruling is reduced. —months not years. This leads to a is a multi-purpose tax framework that lower Total Cost of Ownership. A lot can accommodate parallel sets of • Forms are personalized and pre- of skills are needed to create the configurations within a common filled to be client-friendly and structure of the framework so that it process. Managing these rules is a new reduce filing errors. fits in with the tax agencies’ national business function for the agency. legislation, know-how and working practices. One key to the transformation of the agency is the development of the new The core component of TRM is based business function with the associated upon business rules in a structure that processes to manage the new wealth of has been developed specifically for frameworks. The variable components executing taxation and handling (transient) that directly identify how a subsidies. The rules can be changed tax is levied or a benefit is provided, is simply and re-used. bound to change endlessly—the responsiveness to new regulation, • Rules are used to check and validate creating new handling, exceptions, data on a filed tax form or on a terms and conditions are crucial. submitted application form. These must be developed in its own •Rules are used to perform complex environment, in what we like to call calculations that reflect specific the policy cycle time. The agency in legislative circumstances or legal this way can easily change states: SAP precedents. TRM is a component of the new •Rules can filter out cases for system’s structure designed to deliver a exception handling. In cases where highly scalable handling while still the filing does not fit the basic rules, allowing a fast turn-around to change a case will be made and the case will a regime or implement new taxation. be handed over to an expert. Taxation excellence builds on the capability to effectively manage this governance of tax business rules in line with the policy development cycle.Tax Revenue Management - Reducing the Tax Gap 11
  12. 12. Illustration 5: The SAP Tax and Revenue Management Solution SAP CRM SAP ERP Registration Online Bill Presentment & Payment Financial Returns Processing Customer FSCM Biller Direct Care Receivables & Enterprise Portal Payables Audit Case Management Budget Bankruptcy Case Revenue Accounting Controlling Collections Management Financials PSCD EA-PS * Case/Records Business Management Rules Engine Workflow Intelligence Tax Estimation Documents SAP NetWeaver Tax Analysis * Enterprise Application Public SectorIllustration 5 above shows an market. PSCD is a world standard and tailoring to a specific product, serviceoverview of the SAP Tax and Revenue proven in high volume environments and regulatory domain. These best-in-Management solution with its key in the primary process. Scenarios class components bring specificcomponents. The basic solution cater to the needs of specific groups of know-how to the table. Capgeminicomes with a wealth of components: constituents or enterprises. Back-office has close relationships with SAPcustomer interaction solutions to handling can be unified into a core solution partners and has integratedprovide access to citizens or competence across tax regimes. It is many external applications in SAPbusinesses. The office worker makes optimized for fast handling of large environments.use of the existing frameworks for volumes of data. SAP CRM has beenfinancial customer care and case created to map the large array of Implementing a new solution is not amanagement of Customer Relations relationships between customers. It one-off project in a greenfieldManagement (SAP CRM). The Public can easily capture the types of situation. There is a need to integrateServices Collection and relationships between taxpayers and many existing systems in a larger,Disbursements (SAP PSCD) their tax obligations and handle the unified environment. Capgemini hascomponent is used for high volume historical situations of developing the industrial knowledge and leading-handling of all payment obligations. events in the lifecycle of a taxpayer – edge capabilities in developing serviceCommon functions are available for or his/her relevant environment – architectures around SAP in the publicfiling the tax documents, managing related to a tax obligation. sector and in many industrythe taxation rules, setting up and deployments. Capgemini provides themanaging the workflows. The SAP business platform can be insight from global projects, the extended with external applications necessary skills as a leader in SAPTRM is based on Public Sector designed to deliver specific integration, the capabilities and theCollections and Disbursements. It functionality and style of execution or capacity to manage the change neededmakes use of the common industry can be used to leverage the embedded to allow tax agencies to stand up tocapabilities that are in widespread use know-how. These solutions contain the transformational the insurance and banking sector domain knowledge and haveand on the utilities and telecom configurable parameters that allow12
  13. 13. Public Sector the way we do itConclusion: Collaboration and Working TogetherIn this paper Capgemini and SAP Governments are understandablyhave discussed the complex reluctant to increase taxes and duties.challenges facing tax agencies around The need to support legislation,the world. This complexity is driven policies, and spending requirementsby: in such areas as education and healthcare, drives these agencies to• globalization, capture all appropriate revenues due• citizen demands for better service to the government and to increase and easier access, compliance.• the compliance challenge of SAP and Capgemini are working reducing the tax gap, collaboratively to help tax agencies• the complexity of technological face and overcome these challenges. change, Together, our industry expertise,Government agencies are under comprehensive solutions and proventremendous pressure to provide results will ensure that your taxresponsive services to constituents, agency is able to achieve one corewhile financial support for these mission: to increase revenues andservices is limited or diminishing. improve taxpayer compliance. This mission is to increase revenues and improve taxpayer compliance, thus making the transition to a 21st century government agency.Tax Revenue Management - Reducing the Tax Gap 13
  14. 14. AppendixCapgemini References • “Global CIO Survey 2008” (2008) • “Rising to the Challenge of Financial Transactional Services in the Public Sector”(2008) • “More for Less. A Reality for Tax Agencies” (2007) • “Compliance: Different Tax Systems, Common Challenges” (2007) • “Strategic Sourcing of IT Services” (2007) • “Capgemini’s Enterprise SOA Adoption Program for the Public Sector” (2007)SAP References • “SAP Tax and Revenue Management for Public Sector” (2008) • “The Power of Community” (2008) • “SAP Tax and Revenue Management for Public Sector” (2006)Capgemini Contacts • Ian Pretty, VP, Global Public Sector, Tax & Customs Lead – +31 (0)30 689 9602 • Mario Halfhide, VP, Public Sector Business Development and Sales – + 31 (0)30 689 0380 • Renate Radon, VP, Global Alliance Executive – +49 (0)69 9515 2909SAP ContactsFor further details about the SAP TRM offering, please contact: • Gilad Gans, VP, Head of SAP Public Services Industry at SAP EMEA – +33 (0)1 44 45 21 16 • Markus A. Werling, VP, Head of Business Unit Tax, Revenue and Customs Management, IBU Public Sector – +49 (0)62 2776 2228 • Russ LeFevre, VP, Head of Industry Solution Marketing, Public Services – +1-202-361-9757For further details about the partnership between SAP and Capgemini at EMEA: • Guy Danon, Director, SAP EMEA Ecosystem and Partner Group – +33 (0)6 63 31 23 2014
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  16. 16. About Capgemini and the Collaborative Business Experience® Capgemini, one of the and through a global delivery model world’s foremost providers called Rightshore®, which aims to offer of consulting, technology and the right resources in the right location at outsourcing services, enables its clients competitive cost. Present in 36 countries, to transform and perform through Capgemini reported 2007 global technologies. revenues of EUR 8.7 billion and employs over 83,000 people worldwide. Capgemini provides its clients with insights and capabilities that boost their More information about our services, freedom to achieve superior results offices and research is available at through a unique way of working - the Collaborative Business Experience® - About SAP & the Industry Value Network The Industry Value Network group for our customers to maximize their public public sector brings together leading- value through increased interoperability, edge independent software vendors, reduced total cost of ownership, and technology vendors, system integrators, improved transparency. SAP, and customers to focus on key priority business needs and opportunities With a focus on the business process of within the public sector industry. tax and revenue management, members of the Industry Value Network group for The group drives strong collaboration public sector – customers, partners, and among members to accelerate co- SAP – are collaborating to deliver innovation on SAP’s common platform innovative solutions and new, extended and to provide integrated, multivendor integration scenarios that help governments solutions and services that support key maximize taxpayer compliance and end-to-end public sector business increase revenue collection. processes for our customers. This enablesAuthorsIan Pretty – CapgeminiMario Halfhide – CapgeminiRuss LeFevre – SAPCopyright © 2008 Capgemini. All rights reserved.