Financial Services Ireland

Introducing EY’s new tax tool – CORE Value Chain Analysis

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Introducing EY’s new tax tool – CORE Value Chain Analysis

The global tax environment is becoming increasingly complex. In a time of unprecedented change, how can organisations keep updated, maintain tax compliance, reduce risks and spot opportunities?

International Financial Services organisations will be impacted by changes to global tax treaties through the introduction of the Multilateral Instrument (MLI), the EU Anti-Tax Avoidance Directive (ATAD), the EU Mandatory Disclosure Rules (MDR) and by other developments such as the US tax reform, Brexit and innumerable local tax developments.

Every structure is different and is the output of a strategy, an investor base, and an investment objective. Multi-jurisdictional structures, the interplay of complex rules, different regulations, local interpretation as well an organisation’s approach to the management of tax risk and opportunity, can make getting to grips with the new international tax landscape challenging and resource intensive.

EY’s CORE Value Chain Analysis (VCA)

We have developed the CORE VCA (Commercial, Operational, Regulatory/legal and Economic – Value Chain Analysis). The CORE VCA is not just an economic analysis but also takes into account the effect of legal, accounting, regulatory and practical factors that drive decisions as to location and structure.  When you apply our CORE VCA approach then lots of market practices make sense.

Our approach provides clients with a tool to test any number of outcomes and to incorporate concepts that, regardless of the outcome of proposed legislation, will remain relevant in their tax-planning.  We not only consider the subjective tax changes but also the mechanical rules – in particular; anti-hybrid rules.  There is no alternative but to look at the rules and apply them to client structures.

  • Our approach is always subjective to the client.  What is your value chain, why do you do things that way?  If that is your logic, are you following that consistently? The situation is never static, so how can the solution be static?
  • The tool helps clients to keep up to date on the latest and expected tax developments and align global tax strategy across jurisdictions.
  • Our solution facilitates our clients making strategic business decisions that consider tax risk in real time. For example, where a reorganisation of activities is being considered, the tool can be updated real-time to examine the tax risks and opportunities, subjective and mechanical, of that reorganisation.  Where people or functions are being relocated substance and PE issues can be discussed.  The risks can be rated by you to suit your particular circumstances.
  • Our clients’ tax teams need a way to escalate these issues to boards and other stakeholders.  Our tool provides a route to do this and an output that can be used to communicate the results. It should help you have meaningful conversations with the business.
  • There is more than one stakeholder here – investors, investees, boards, regulators and tax authorities are all interested in what our clients are up to.  Our approach allows us to produce tailored outputs (one-page summaries, detailed entity by entity analysis) that can be used to frame a discussion with all different types of stakeholders.

Using CORE VCA

Watch our short walkthrough of using CORE VCA, or download our brochure via the link below. If you have a question, or would like to arrange a demo, don’t hesitate to get in touch.

 

Sinéad Colreavy

Director, Business Tax Advisory
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