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Centralizing management of grants and incentive

I n response to these changing patterns in global trade, global companies are rapidly transforming their supply chains to go wherever necessary to reduce costs, launch products and enter lucrative new markets. For many companies, supply chain activities such as product engineering, sourcing, manufacturing and logistics are now widely dispersed around the world. Indirect taxes and supply chain reorganization Any supply chain restructuring will have an important impact on the company’s indirect tax position. For example, what are the new obligations? What is the impact on duty costs? Which company must now account for tax — where is it due and when? Businesses often launch supply chain restructuring projects without considering the indirect tax implications. But this can mean that risks and costs are increased and valuable opportunities are missed. Indirect tax is relevant for all aspects of the supply chain, including: • Development and strategy • Research and development (R&D) and design • Procurement and sourcing • Manufacturing • Distribution and logistic • Services, both customer-facing and internal Indirect tax issues for centralized operating models Supply chain models with a central business entity are particularly challenging from an indirect tax point of view. Centralized operating models often result in an increased number of transactions and companies having to fulfill indirect tax obligations across many geographies. Because these models are intended to obtain operational and financial benefits, indirect tax considerations are typically not at the forefront of the design process. Even if physical distribution channels are not changed as a result of the centralized model, the indirect tax treatment and application of indirect tax arrangements may be seriously different. It is quite common for centralized operating models to result in a disconnect between physical product flows and the legal and financial ownership of the products. The main indirect tax challenges arise from the central company: