Tax and XBRL GL … the logical next step

1. Tax and XBRL GL … the logical next step The phased adoption of XBRL in the tax domain ADVISORY / FINANCIAL SERVICES Marc van Hilvoorde Tokyo, november 8, 2005

2. Tax declaration/filing: “Give us the amount of your profit” Type of information needed: <profit>80</profit> Inspection/audit: “Prove to us that your amount is correct” Tax processes: different data needed Type of information needed: • <sales transaction>1</sales transaction> • <sales transaction>2</sales transaction> • <sales transaction>3</sales transaction> • <purchase transaction>1</sales transaction> • < purchasetransaction>2</sales transaction> • < purchasetransaction>3</sales transaction>

3. Tax declaration/filing: “Give us the amount of your profit” Inspection/audit: “Prove to us that your amount is correct” Tax processes: create information from data data Inspection / audit • Sales transactions with large discounts • Ratio and trend of purchase ó sales • Percentage and trend of production losses • Profitability compared to the market • Purchase/sales changes while stock remains the same • … information

4. Audit file Financial Tax authority Company X Company X Company X Tax authority Back office system Audit file Payroll Company Financial System Company Financial System Company Financial System Audit file Other Other …( parties?) e.g. auditor, … Other …( parties?) e.g. auditor, … Financial intermediaries and audit firms The logical first step Proprietary standard, specific solution per domain, limited flexibility in defining data requirements

5. Tax authority Tax authority Back office system The logical next step: XBRL GL Query Company X • Inspection • Data requirements differ: specific for branch, company, process • Data source systems differ Custom Audit file Company Financial System Query Company Y Custom Audit file Company Financial System Query Company Z Custom Audit file Company Financial System

6. Evolutionary steps in digital tax processes • Digital filing of taxes (eTax filing) • Audit files with transaction information and master data • Automated audit procedures • “Look for sales transactions with large discounts” • “Calculate ratio and trend of purchase ó sales” • “Calculate percentage and trend of production losses” • “Compare profitability with the market” • “Look for purchase/sales changes while stock remains the same” • Integration with accounting data model and accounting software, opposite to separate tax data model and specific tax software • Query based custom (company specific) audit files, based on a risk profile, per sector, per company, using historical and benchmark data • Completed ‘tax filing forms’ • “We think this is your profit, prove us if this is not true”

7. XBRL for taxes

8. Wrap up… • XBRL can be implemented in steps in the tax domain • Different tax processes use different kind of information and are supported by different kind of taxonomies (FR ó GL) • XBRL GL is a critical component in supporting tax processes • ..and XBRL International needs to resolve some issues to facilitate the tax domain

9. Thank you • Background • Dutch governmental project: Building a financial reporting, tax, statistical taxonomy and supporting infrastructure • Project website: www.xbrl-ntp.nl (English background available) • Marc van Hilvoorde, KPMG The Netherlands • Vice chair International domain working group • Vanhilvoorde.marc@kpmg.nl