KPMG Value Chain Analysis

KPMG Value Chain Analysis

A Value Chain Analysis (VCA) considers an end to end view of a company’s activities, enabling a better perspective on the way a business works and how each component contributes value.

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Through harnessing the power of VCA, taxpayers can more easily assess the relative importance of different contributions across a whole multinational enterprises (MNE) value chain. This has many different applications to tax.

The changes proposed by the OECD Base Erosion and Profit Shifting (BEPS) Action Plan have the potential to radically change tax outcomes for many taxpayers. The realignment of taxing rights with economic substance is at the heart of the initiative. There is also increasing need to look beyond two transacting parties, at all contributions, which lead to the generation of profit for a business.

The focus for tax analysis needs, more than ever before, to be on identifying the economically significant and value creating functions within a business and the parties responsible for those activities.

The issues you can address using KPMG’s VCA approach include:

  • BEPS transfer pricing risk assessment - Assessing your transfer pricing model’s alignment with the latest OECD BEPS rules
  • Documentation - Meeting the new Master File Requirements and explaining group profitability in Country By Country Reporting
  • Transfer pricing and operating model – Developing appropriate and sustainable models post BEPS
  • Effective communication of tax strategy to stakeholders - For clarity and simplicity in discussions with key business stakeholders
  • Communicating your business and tax strategy to tax authorities – To prepare for discussions with tax authorities as part of an enquiry, APA or for DPT purposes

KPMG’s VCA methodology

KPMG has developed a flexible methodology and targeted deliverables which can allow companies to take a holistic view of a business by considering the entire value chain when performing a tax review.

Our core methodology has been tried and tested over many years and multiple industries. We have refreshed and redesigned it to help ensure the latest OECD BEPS guidance is fully reflected. We have also designed a series of tools to capture our findings and present our analysis in the most useful manner for the multiple tax applications of VCA.

If you would like any further information or would like to discuss how we can apply VCA for your organisation please do not hesitate to contact us.

Video: Value Chain Analysis

Increasingly businesses are recognising the benefits of an end-to-end Value Chain Analysis (VCA) to support their Tax and Transfer Pricing strategies.

 
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