Restructuring the processes of Tax Authorities

1. in collaboration with
Tax & Revenue Management
– Reducing the Tax Gap

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 UK's
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. Public Sector the way we do it
What are the compelling pressures tax agencies face today?
Governments – particularly those in high percentage of government service changing the way in which frontline
Europe 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 a
citizen cost money, but the citizen is government’s advantage by: New technologies have also
no longer willing to pay more taxes to fundamentally changed the way in
pay for these services. In addition, as • investing in new, less expensive ways which services, whether they are in
economies globalize, businesses are to deliver frontline services to the the private or public sector, are
taking corporate tax rates into citizen, delivered. This has seen the channels
consideration in their investment • looking at how they can create more of delivery moving away from
appraisals – in effect, governments effective back office, public traditional face-to-face contact to call
have to use corporate tax rates as a administrative functions for less cost, centers and the Internet. Technology
means to compete with one another has created flexibility in how and
• looking to where others can provide
and 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 adaptive
government have become tighter – tax technology. Four Challenges Facing Tax
rates cannot be increased, the Agencies
taxpaying population is decreasing Most countries are investing in Tax agencies cannot escape these
and within the EU the opportunities modernization programs, for example public sector challenges. A simple
to 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 shown
But it is possible to turn this challenge Central Government, the in the table below. There is a
around and see the opportunity to “Transformational Government” Agenda dilemma: reduce the tax gap while
transform the way that governments in the UK, and the “President’s improving efficiency and being citizen
deliver services. If the source of income Management Agenda” in the US. These friendly and at the same time going
is more restricted, then governments agendas have much in common. They through a new strategic positioning
have 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. These business challenges are not Globalization increases the challenges obligation only. All traditional values
uncommon among most major tax of tackling non-compliance and are turned upside down. Agencies face
agencies 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, and
meet citizen demands are the norm. economic activity globalizes the easier how to keep control of the new
This is because of the importance of it becomes to move money around decentralized data collection
the tax agency as the government’s and to therefore avoid taxes. And in structures. Creating bespoke solutions
banker and because taxation provides rapidly expanding economies, such as is out of the question: this takes too
the bulk of the income to enable a China, there is the added challenge of long and the flexibility that is needed
government to function. an entrepreneurial high income cannot be designed for – this is
section of society which, when industrial knowledge that is not
Tax agencies have a responsibility to combined with a still largely cash- readily available. Agencies need
reduce the gap between what ought to based economy, means tax avoidance insight to change and make that leap.
be paid and what is collected as taxes. is much more likely. As an example of They must choose the integrator who
With 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 step
amount of tax and therefore transporting firm to file an import up to the transformational change.
undertake compliance activities where it likes – some countries will
because some parts of the taxpaying see a large drop in revenues (levying The Components of Tax & Revenue
community are non-compliant (the import duties and VAT might go Management
so-called tax gap between what tax elsewhere). Within the tax administration
should be collected and what is lifecycle, we see the business process
actually collected). This can be caused As a result, agencies everywhere are of managing tax assessment, collection
by lack of insight, error-prone filing thinking about their position. New and enforcement as having nine broad
and 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. Capgemini
Illustration 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. 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. Adding Complexity to this Environment:
Financial Transactions in the Public Sector
Illustration 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 info
In our view, the complexity is not going • Where the state fulfils financial blend some of them. In the
away. 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 the
shown in Illustration 3. In his paper “A benefits, unemployment benefits, provider of social security benefits to
Quiet Revolution: Government’s agricultural payments and pensions. those in work. In Denmark, the tax
Transactional Services”(1), Graham agency is responsible for vehicle
Walker 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 student
Financial transactions can be readily citizen purchases products or loans, a student loan company
mapped on to this process and services from the state – for example manages the process and provides the
typically take place in the public passports, visas, discounted loans, but it is the tax agency which
sector 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 Transactional
Services, Graham Walker at the UK’s Institute of Public
Policy Research
6

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. A Tax & Revenue Management Solution to Reduce
the Tax Gap
The SAP Tax and Revenue What are the problems associated Note that these problems are not
Management for Public Sector with non-standardized systems? isolated to the CIO, but impact the
package is a holistic tax and revenue • Many existing tax agency IT entire organization, including the
administration solution that provides environments are comprised of executives, management and staff
a single view of the taxpayer and stand-alone, custom-built, and/or within a tax agency. So given the
supports multiple revenue types, legacy systems that are literally severity of these problems, and the
helping tax agencies increase isolated islands of automation, each magnitude of the tax gap, how does a
collections and maximize compliance. supported by separate staff for each standardized solution address these
It is configurable, upgradeable, tax and revenue type. This fosters pains and problems?
standardized, commercial off-the-shelf fraud and reduces compliant tax
software that supports the tax and payments because there’s no Illustration 4 below represents a view
revenue management life cycle at visibility into taxpayers’ overall tax of how the SAP Tax and Revenue
lower risk and cost than custom- and payment status. Management solution supports the
developed solutions. key business processes across the tax
• High maintenance costs to update, and administration lifecycle. Note that
In the United States, COTS means the integrate and adapt these systems the complexity, inefficiency and
same 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 tax
is an acronym commonly used in the processes mandated by legislative and revenue lifecycle but with the
public sector. Both COTS and action or constituent demands improvements and benefits delivered
standardization refer to things one can by SAP to tax agencies.
buy (for sale) from a provider that are • Poor customer services for
pre-integrated and available for taxpayers, who must communicate Each of the green boxes represents a
deployment. These deliver more with separate offices for each tax capability and benefit that SAP
available functionality, while lowering type or fee and have to cross delivers to the tax agency, associated
the risk of both initial and ongoing organizational boundaries to solve with the pains and problems from
costs 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. 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 and
Tax Revenue Management - Reducing the Tax Gap 9

10. Seventh, by providing the taxpayer Finally, built-in business intelligence The SAP solution also helps
with a single point of contact, helps demonstrate public synchronize multiple sources of
governments foster improved accountability and operational taxpayer data, whether it’s captured in
constituent-oriented services. Tax transparency. Tax agencies can track the federal or central government tax
agencies can quickly post payments and measure against specific KPIs and departments or even in social service
and returns to taxpayer accounts, and performance metrics, such as departments. For example, either
generate refunds on a timely basis. increased revenue per dollar spent, constituents have a job (tracked by
Multi-channel enablement and score against internal service the tax agency) or they depend on
knowledge management ensure standards (such as first-call response, support from the Government
enquiries that are answered process x% of returns by deadline, (Department of Health and Human
consistently and on the first contact. etc.), ‘cost per dollar collected’, or Services). Or other agencies from both
Activity management ensures that ‘number of taxpayer cases closed’, the federal and state or local level
enquiries levels are met and builds a ‘cost per return filed’, ‘% of electronic depend on these databases. SAP’s
complete 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 in
of taxpayers to improve voluntary agent per month’, ‘average days to synch, to maintain a ‘single version of
compliance, and segmentation ensures issue refund’, ‘% of returns filed the truth’ and ensure master data
the 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 local
Eighth, integrated financial revenue management solution that tax, social services, housing agency
management 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 maximize
and lowers the time for financial remittance processing and audits to government efficiency.
reconciliation and closing, while revenue posting and distribution. This
speeding up revenue distribution to avoids the cost and inefficiency of The ultimate value of the SAP Tax and
support government programs and multiple, redundant, custom-built, Revenue Management solution is that
services. 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. Public Sector the way we do it
The 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. 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 Sector
Illustration 5 above shows an market. PSCD is a world standard and tailoring to a specific product, service
overview 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 specific
components. The basic solution cater to the needs of specific groups of know-how to the table. Capgemini
comes with a wealth of components: constituents or enterprises. Back-office has close relationships with SAP
customer interaction solutions to handling can be unified into a core solution partners and has integrated
provide access to citizens or competence across tax regimes. It is many external applications in SAP
businesses. The office worker makes optimized for fast handling of large environments.
use of the existing frameworks for volumes of data. SAP CRM has been
financial customer care and case created to map the large array of Implementing a new solution is not a
management of Customer Relations relationships between customers. It one-off project in a greenfield
Management (SAP CRM). The Public can easily capture the types of situation. There is a need to integrate
Services Collection and relationships between taxpayers and many existing systems in a larger,
Disbursements (SAP PSCD) their tax obligations and handle the unified environment. Capgemini has
component 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 service
Common functions are available for or his/her relevant environment – architectures around SAP in the public
filing the tax documents, managing related to a tax obligation. sector and in many industry
the taxation rules, setting up and deployments. Capgemini provides the
managing the workflows. The SAP business platform can be insight from global projects, the
extended with external applications necessary skills as a leader in SAP
TRM is based on Public Sector designed to deliver specific integration, the capabilities and the
Collections and Disbursements. It functionality and style of execution or capacity to manage the change needed
makes use of the common industry can be used to leverage the embedded to allow tax agencies to stand up to
capabilities that are in widespread use know-how. These solutions contain the transformational challenge.
in the insurance and banking sector domain knowledge and have
and on the utilities and telecom configurable parameters that allow
12

13. Public Sector the way we do it
Conclusion: Collaboration and Working Together
In this paper Capgemini and SAP Governments are understandably
have 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 requirements
by: 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 proven
tremendous pressure to provide results will ensure that your tax
responsive services to constituents, agency is able to achieve one core
while financial support for these mission: to increase revenues and
services 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. Appendix
Capgemini 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
ian.pretty@capgemini.com – +31 (0)30 689 9602
• Mario Halfhide, VP, Public Sector Business Development and Sales
mario.halfhide@capgemini.com – + 31 (0)30 689 0380
• Renate Radon, VP, Global Alliance Executive
renate.radon@capgemini.com – +49 (0)69 9515 2909
SAP Contacts
For further details about the SAP TRM offering, please contact:
• Gilad Gans, VP, Head of SAP Public Services Industry at SAP EMEA
gilad.gans@sap.com – +33 (0)1 44 45 21 16
• Markus A. Werling, VP, Head of Business Unit Tax, Revenue and Customs Management, IBU Public Sector
markus.werling@sap.com – +49 (0)62 2776 2228
• Russ LeFevre, VP, Head of Industry Solution Marketing, Public Services
russ.lefevre@sap.com – +1-202-361-9757
For further details about the partnership between SAP and Capgemini at EMEA:
• Guy Danon, Director, SAP EMEA Ecosystem and Partner Group
guy.danon@sap.com – +33 (0)6 63 31 23 20
14

15. Public Sector the way we see it
Foot-Right; Foot-Document Title; Helvetica 65 medium 8pt 15

16. www.capgemini.com/public
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 www.capgemini.com/public
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 enables
Authors
Ian Pretty – Capgemini
Mario Halfhide – Capgemini
Russ LeFevre – SAP
Copyright © 2008 Capgemini. All rights reserved.