Indirect Tax Process Model Development

[john.glaubitz@vertexinc.com]

Greetings,

Some work has continued on a sales process model in support of indirect
taxes.  I've attached a model dated 20040114 that was an attempt to
converge the indirect tax process model that was created for TASC, the UBL
model for a sales order and an initial set of comments from Dave Chambers
from the H M
Customs & Excise in the United Kingdom.   (The models are produced using
Visio and converted to pdf for distribution.)  Below are some follow up
comments from Dave along with my comments.  Following this is a model with
some updates based on these comments along with the model of the Evaluated
Receipts Settlement process Dave references.

I would again like to invite some dialog on these models to get a variety
of perspectives.

Regards,
John


Model submitted on Jan. 14:(See attached file: IndirectTax20040114.pdf)

Dave's Comments:

   I would not claim intimate knowledge of business processes in North
   America, but I believe that the invoice is regarded as a reconciliation
   document only
   in North America. I think this is probably why you have titled the 3rd
   higher level process in the Supplier (Seller) column "Sales
   Reconciliation"
   and the 4th process in the Customer (Buyer) column "Purchase
   Reconciliation".

   From an indirect tax viewpoint in Europe, however, the "tax invoice" is
   a core document. The "tax invoice" shows the amount of Value Added Tax
   (VAT)
   which the supplier has to account for to the tax authorities in the
   member state in which it is registered for VAT (output tax). In the vast
   majority
   of transactions, the customer must receive the tax invoice which
   provides evidence to support the claim by the customer from the tax
   authorities of
   the VAT charged by the supplier (Input tax).
   <<Is this truly a separate document and are there separate processes
   that use it such as a "tax reconcilliation"?>>

   The European Union Commission implemented with effect from 1st January
   2004 the "EU Invoicing Directive" which is designed to harmonising the
   contents of the "tax invoice" throughout the European Union.

   The main point I would make, however, relates to the Customer (Buyer)
   column. You have the "Despatch advice" feeding the "Receive Despatch
   Advice"
   sub process in the "Delivery Reconciliation" process, a 2nd sub process
   "Reconcile delivered, ordered and advised items" and a 3rd sub process,
   generate receipt advice. You also have the invoice feeding the "Receive
   Invoice" sub process in the "Purchase Reconciliation" process and show
   the
   Purchase Reconciliation process reconciliation as invoice to received
   items.

   In fact, in a European context, the full reconciliation would be either:
   a "two way" match: Purchase order reconciled to invoice;
   a "three way" match: Purchase order reconciled to invoice reconciled to
   goods receipt (this is the most commonly implemented match); or
   a "four way" match: Purchase order reconciled to invoice reconciled to
   goods receipt reconciled to quality criteria.
   <<I've modified the model to account for this.  Let me know if I've
   captured the issue.>>

   I think it would be worth showing "Determine Tax" either in "Request
   quote" or "Place order" in the "Customer/Buyer" column.
   <<Would the Customer be the one that would determine tax at this point
   in the process?Of course they could for their own purposes, to
   pre-determine the potential total cost, but I think the primary concern
   is the source of the information in the transmitted documents.  Would
   this determined tax be included on the quote request or order?>>

   The other topic which I would mention is "Evaluated Receipts Settlement"
   (ERS) which allows goods receipts to be settled without receiving an
   invoice
   from the vendor. In a European Context, the tax invoice is issued by the
   customer on behalf of the supplier and the process is referred to as
   "Self
   billing". This is becoming more and more common with the wider use of
   Electronic business.

Revised Model: (See attached file: IndirectTax20040119.pdf)

ERS Model: (See attached file: 20040118_self_billing.doc)

IndirectTax20040114.pdf

IndirectTax20040119.pdf

20040118_self_billing.doc