Can indirect tax grow a company? Lessons in agility from global giants

“Grow the business,” they said. “But how?” they asked. “Through indirect tax,” said the CFO, and they all leaned in and listened.

Businesses are constantly seeking ways to improve overall efficiency, minimize risk, and grow their financial strength. But companies that look to their global indirect tax process as a central player in operational efficiency separate themselves from competition. Notably, businesses that underwent this process several years ago have demonstrated significant and lasting improvements, with unparalleled market strength and a clear competitive edge.

Automation allows businesses to quickly and efficiently enter new markets and launch new products with less risk.
Automation increases the bottom line by reducing millions of dollars in tax penalties and audits.
Automation eases resource shortages and offers time for a strategic focus.

Digital transformation is a major undertaking that not all companies are able or willing to embark on. But the players sitting on the sidelines, working with a patchwork of poorly integrated tools, will likely be left behind and might not survive in the future. The competitive edge is growing sharper and happening at faster rates, leaving much larger gaps between laggards and innovators.

Thomson Reuters ONESOURCE has helped automate the global indirect tax process for multi-national corporations for years, enhancing their tax determination processes and ultimately helping them perform at accelerated rates.

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Henry Company

Informatica

Lenovo

Jones Lang LaSalle

Adobe

Common thread: Automated indirect tax solutions drove growth

Henry Company

Henry Company is a leading developer, provider, and reseller of building products in North America. They needed to address the challenges of manual and reactive tax determination processes, which were central to its transformation. They faced issues with exemption certificate management, monthly manual compliance, and identifying and updating jurisdictional rates.

“Working with DMA and Thomson Reuters has taken our sales tax processing and compliance out of a relative stone age.”

Real-time billing and consistent correct tax determination: ONESOURCE Indirect Tax Determination determines their taxes in real-time, reducing errors and ensuring compliance.
Exemption management: ONESOURCE manages exemptions instead of JD Edwards, streamlining the process and reducing compliance issues.
Job-based exemptions functionality: The solution enabled Henry Company to manage exemptions more efficiently.
Streamlined audit process: ONESOURCE provided a new system of record and report functionality, reducing the time spent on compliance.
Automate and update rates: ONESOURCE provides real-time updates to jurisdictional rates and content applications.

The solution provided critical accuracy and automation. This allowed the team to work with confidence, reduce errors and compliance risks, and focus on value-added activities.

Informatica

Informatica is a B2B company that sells cloud data management solutions to help businesses understand the power of data. However, the company faced major data quality challenges. With an automated tax tool for their U.S. and Canada needs, everywhere outside North America was maintained manually with an ERP.

The tax team relied on IT to update tax rates or rules whenever necessary. The timeliness of the updates was problematic, giving the IT team more power over the tax data than the tax team. Informatica found regulatory changes a compounding issue as a tech company trying to navigate economic and operating uncertainty.

“That’s been a really big benefit, as I don’t always have to monitor…ONESOURCE has helped me keep up with regulatory changes.” — Rob Newlin

Informatica achieved several benefits by implementing Thomson Reuters ONESOURCE, including:

Global indirect tax visibility: Informatica’s tax department now sees global indirect tax processes clearly, allowing them more consistency and control.
Reduced IT involvement: ONESOURCE reduces IT involvement in tax-related matters, giving the tax department more control and autonomy.
Improved data quality: ONESOURCE helped identify gaps in data entry and improved transaction data quality.
Increased efficiency: Informatica’s tax team could manage indirect tax determinations in multiple countries, reducing manual effort and increasing efficiency.
Support for growth and expansion: ONESOURCE enabled the tax department to support growth and expansion efforts across the business, managing indirect tax determinations in roughly 30 countries.
Confidence in regulatory changes: Informatica’s tax team focused on other priorities, knowing that ONESOURCE continually monitors and keeps current changes impacting indirect tax rules and rates.
Error reduction: ONESOURCE helped reduce errors in transaction data entry and quality.

Overall, Informatica’s implementation of ONESOURCE resulted in improved efficiency, reduced errors, and increased confidence in managing indirect tax obligations.

Lenovo

Lenovo, a top manufacturer of personal computers, faced compliance challenges with cross-border tax requirements and determining sales and use tax, goods and services taxes, and value-added taxes. By automating their tax processes, they made sure their taxability was calculated correctly. This made their tax strategy align better with business processes.

“We need to make sure our taxability is calculated correctly the first time, without having to recalculate or fix things on the backend. We also wanted to avoid or at least limit human intervention with the taxdetermination.” — Dennis Culin

Lenovo achieved several benefits from implementing ONESOURCE Determination:

Streamlined and integrated transaction tax processes: Lenovo integrated ONESOURCE Determination with its SAP system to centralize tax determination. It provided a single compliance database for U.S. and international transaction taxes.
Automated tax determination: The solution automated the determination, calculation, and recording of U.S. sales and use tax and international VAT, reducing the need for human intervention and minimizing errors.
Improved accuracy: ONESOURCE Determination ensured accurate taxability calculations, reducing the need for recalculations or fixes on the back end.
Reduced manual intervention: The solution limited human intervention with tax determination, allowing the tax department to control tax liability and reducing the risk of errors.
Simplified global tax compliance: ONESOURCE Determination helped Lenovo manage complex global tax compliance challenges, including constantly changing tax rates and rules across multiple countries.
Custom capabilities: The solution was customized to automatically determine transactional environmental handling fees required by customs authorities, saving additional administrative time.
Global deployment: The tax department globally deployed ONESOURCE Determination controlling most tax work within the solution rather than in SAP.

Overall, Lenovo’s implementation of ONESOURCE Determination helped the company achieve a more efficient, accurate, and streamlined approach to transaction tax management. Making for a global business operations and growth strategy success story.

Jones Lang LaSalle

Jones Lang LaSalle (JLL), global commercial real estate company operating in over 50 countries, was greatly challenged by global compliance. With about 3000 tax returns created annually, they needed greater oversight and control of their tax reporting to avoid negative cash flow and reputational damage.

“For me personally, it’s shifted a process that used to be reactive to being proactive. The process just works in the background.” — Kevin Escott

The benefits of using Thomson Reuters ONESOURCE for JLL’s indirect tax solution included:

Efficiency improvement: JLL was able to reduce workloads by over 60%, streamlining tax processes and enabling local resources to spend less time on mundane tasks.
Risk reduction: The solution helped minimize compliance risks by providing greater visibility and oversight. In turn, this ensures regulatory requirements were met and reduces the chance of costly compliance errors.
Centralization and standardization: ONESOURCE centralized operations, allowing JLL to standardize and simplify their tax reporting procedures globally.
Proactive management: The technology shifted the tax reporting process from being reactive to proactive, with processes running smoothly in the background.
Improved reporting capabilities: JLL benefited from enhanced reporting capabilities, reducing month-end reporting time from three days to less than one. As well as better tracking and monitoring of global filings.
E-invoicing compliance: The partnership with Pagero helped JLL navigate evolving e-invoicing mandates, ensuring compliance with changing regulatory requirements efficiently.

Overall, ONESOURCE provided JLL with robust and streamlined processes, stronger visibility of tax spend, and minimal intervention requirements. Thus, contributing to a more confident and effective tax management strategy.

Adobe

Adobe, a leading multinational software company known for its products and services, faced a complex and fragmented global indirect tax process. Completing sales tax returns was a time-consuming process taking nearly two weeks to complete. Due to unstandardized procedures, their indirect tax system configurations were heavily reliant on IT resources. Additionally, the European Union’s tax jurisdiction changes for e-commerce companies further complicated matters. Adobe was required to apply local VAT rates based on customer locations across 28 countries and needed automation in order to stay compliant and agile.

“With indirect tax becoming more and more important to governments around the world from a revenue perspective, we knew we needed a single, global solution with a local focus.” — Brian Gardner

Adobe benefited significantly from implementing ONESOURCE Determination:

1. Risk reduction: Adobe’s tax department was able to significantly reduce the risks associated with indirect tax calculation, reporting, and compliance, achieving total control over their processes.

2. Compliance: The implementation allowed Adobe to be in complete compliance. This mitigated risks and enhanced financial management with the 2015 European Union regulations that required companies to apply local VAT rates based on customer location. A feat not attainable under their previous processes.

3. Cost savings: By leveraging the expertise consolidating their tax management onto a single platform, Adobe reduced unnecessary tax management costs, resulting in savings of over $1 million.

4. IT resource efficiency: The reliance on IT resources was greatly reduced, with a 95% reduction in ABAP coding and SAP customizations related to tax. Unexpectedly the reduction surpassed the IT director’s original goal of a 40%.

5. Time savings: The time required to complete sales tax returns was dramatically reduced from two weeks to just 30 minutes. Consequently, allowing the tax department to focus more on strategy and analysis.

6. Enhanced reporting: With a clearer understanding of tax payments in specificcountries, Adobe’s tax department could present accurate metrics confidently tosenior leadership. Unexpectedly but most welcomed was the recognition and elevated value within the organization.

Overall, ONESOURCE provided Adobe with a streamlined, standardized, and centralized approach to managing their indirect tax processes, increasing compliance, accuracy, and control.

Common thread: Automated indirect tax solutions drove growth

A common thread among these transformation case studies was the imperative to overcome the limitations of manual and reactive indirect tax processes. To achieve this, each organization sought a solution that could deliver scalability, precision, automation, and proactive guidance on navigating complex international tax laws and e-invoicing requirements.

Through strategic collaboration with Thomson Reuters and other expert partners, these companies were able to enhance their competitiveness by operating with increased agility, responsiveness, and speed to market. Which ultimately drives business growth and expansion. Major proof points are to look at where they were as businesses before the transformation and where they are now. For those that underwent the process several years ago, their market strength is undeniable.