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Transforming tax data as an opportunity for growth

Transforming tax data as an opportunity for growth

Michelin’s path to tax digitalisation

Automated VAT recovery platform delivered €3,300,000 in 3 years

At the recent KNect365’s Tax Transformation Summit in London, tax professionals from around the world came together to learn more about how technology is helping to transform the tax function. One of the highlights of the event was an in-depth look at how a leading multinational is implementing new indirect tax initiatives within their operations.

Jose-Manuel Pedron-Garcia, Global Tax Compliance Process Leader at Michelin – the second-largest tire manufacturer in the world with more than 300 global entities and net revenues of €22 billion – discussed the complexities Michelin faced in recovering VAT on their huge travel spend of more than €80 million per year. They sought to improve the compliance and efficiency of their processes without using additional resources or budget. After outsourcing their VAT management to VATBox, Michelin recovered more than €3,300,000 in three years.

Mr Pedron-Garcia talked about the power of digitalisation, saying that tax-related data represents “opportunity for improvement and opportunity for revenue for your company.” He described how his company utilised the power of technology to recover more VAT than they ever thought possible. “VATBox gave us good visibility into our data and brought us added value. They have improved the compliance and efficiency of our process, reducing Michelin’s involvement.”

 

He also pointed out the benefit of using VATBox’s automated technology to process every single invoice, no matter how small. “Last year Michelin recovered €230,000 strictly from invoices under €50, which represents 20% of the average recovered every year.”

He also talked about the importance of working with a provider that has the right competencies and expertise. As an example, Mr Pedron-Garcia spoke about a case in 2016 when the German authorities rejected all Michelin’s claims because the name of the company was not consistent. VATBox appealed to the authorities on Michelin’s behalf and managed the claim.

“Thanks to VATBox, we were able to recover €201,000, which was 94% of the original amount claimed.”

In fact, Michelin’s overall rejection rate has dropped from 42% in 2015-16 to 26% this year. That 16% reduction represents an additional recovery amount of €160K.

The industry leader offers four tips for companies seeking to move toward digitalisation:

  1. Internal communication: Making sure each employee understands how they can contribute to improving the amount of VAT the business ultimately recovers.
  2. Change management: Being proactive about working with all entities to review, challenge, and even change the system or business model to unlock the added value for the company.
  3. A single process: Deploying a single pay model from booking the trip to the business justification. The simpler your process, the more value it will bring.
  4. Collaborate with suppliers: Involving vendors – hotels, travel agency, etc. – to ensure that the documentation is correct from the start.

Mr Pedron-Garcia also encourages other tax professionals to take action. “There are a lot of people in your company waiting for you to lead the change that can bring value to your company. Saving money, improving compliance, and improving the process. With a minimum involvement of your teams, I have done it; you can do it.  Lead the change you believe in.”

For more details about how Michelin’s partnership with VATBox helped them recover more than €3,300,000 in three years, download the full Case Study.

For other case studies, please visit the Success Stories section on our website.

For more information about how VATBox can help your company succeed in today’s complex financial climate, contact us.

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