- Service: Tax, Corporate Tax
- Type: Business and industry issue
- Date: 06/10/2010
TESCM integrates supply chain design with tax optimisation delivering significant increases in profits. It is based on the premise that incorporating tax arbitrage into supply chain structures (typically by optimising the location of the key supply chain functions, assets and risks) realises benefits well beyond conventional operational savings on their own. TESCM is especially topical as tax authorities are challenging traditional tax planning structures and products. At the same time businesses are changing their operating models in response to the economic downturn.
What's on your Mind?
- Want to minimise both cash and/or effective tax rates and risks across all taxes
- Need to drive cost reductions and operational efficiency through the supply chain
- Need to increase efficiency and effectiveness in the sourcing, manufacturing, sales, distribution, tangible and intangible asset strategies, as well as achieve supply chain structural change
- Effective post merger or acquisition integration required, as well as when expanding into new markets or new channels (or post disposal business realignment)
- Enterprise-wide information systems have been planned and implemented
Bringing you Peace of Mind
- We offer a global network of TESCM specialists who have a proven track record of implementing TESCM structures generating significant operational and tax benefits for clients
- We provide the client with integrated business (including supply chain, organisational design and IT systems impact) and tax knowledge and insight that can help enable a bespoke and world-class operating model that is flexible and scaleable, including the identification of quick wins to help maximise investment return
- By providing tailored TESCM strategies to multi-national groups, we remain at the forefront of technical development and thought leadership, having managed and delivered TESCM structures on a global basis for some of the worlds' largest and most complex multinational groups. We have delivered tax savings (to be added to operational savings) of €100 million a year on an annual basis for one client and of €50 million a year for another
What's in it for you?
- Increased profit after tax and therefore shareholder return as well as benefits above the line most of the time
- Improved supply chain management accessed through the creation of centrally controlled strategic and tactical operations
- An ability to leverage procurement scale
- Improved tax risk management
- Simplification of intra group transactions
- Best in class IP management
- Improved paybacks for large scale supply chain and IT projects
- KPMG takes an integrated approach, using its global network of Tax and Advisory specialists , with thorough knowledge and experience in working on TESCM projects together, ensuring both local and cross border tax issues are properly addressed
- Our experience enables us to understand the practical issues faced by clients during a TESCM project
- We have helped multi-national clients save significant sums: over £350m for one client alone on an annual basis
- Global Mobile Telecommunications Company with a multi-billion turnover, millions of customers and a worldwide presence
- KPMG was engaged to support a global business transformation programme and to help identify opportunities to reduce costs within the supply chain. We helped by focusing on four dimensions: Supply chain organisation; Decision support; Transaction processing; and Operating systems
- The result optimised procurement and involved a significant step change and transformation of the company's supply chain, tax, finance and HR functions.This ultimately enabled the company to leverage its global scale and scope across its supply base in a way that reduced both operational and tax costs
- Global Agri-business Company: European Business Transformation Project. As a consequence of long-term growth in Europe, mainly through acquisitions, the client needed to align its products, services and headquarters to create a single European organisation and head office
- KPMG helped the client to establish a centralised commercial and corporate management team, standardised operating models and IT processes, coordinated key account management and opportunities for operating costs reductions. In fact, continued financial efficiencies through tax cost reductions exceeded one-time start up costs. Intangible benefits included cross-divisional knowledge sharing, enhanced cooperation, and process improvement
- Global Consumer Products Company: Global Tax Efficient Procurement Feasibility Study. The organisation had already established Tax Efficient Supply Chain companies in its Europe and Asia regions
- KPMG was engaged to assess the feasibility of establishing a centralised tax efficient procurement company responsible for the procurement of indirect and direct goods and services. KPMG helped the client to assess specific trading models for the central procurement company and the associated tax, transfer pricing and business impacts.
Management Consulting - How We Can Help
At a recent roundtable, hosted by KPMG in partnership with FDE, eight leading CFOs gathered to discuss their views on how organisations can take a renewed approach to driving business transformation programmes through the integration of commercial and tax considerations.
The Worldwide Debt Cap rules will restrict the tax relief for interest costs in many UK companies for accounting periods beginning on or after 1 January 2010. These rules are extremely complicated and are likely to impose a major burden on many groups. To assist you in managing your debt cap position, we have developed KPMG’s Debt Cap Tool.