Tax Cockpit and KPI Definitions

Tax Cockpit and KPI Definitions
Beispiel Global Tax Group (GTG)

203 Tax Cockpit

Tax Cockpit – 1. Dimension: Profitability

Tax Cockpit – 2. Dimension: Liability

Tax Cockpit – 3. Dimension: Risk optimization/Flexibility

Definition of core KPIs
Relevant Tax KPIs were precisely defined and can be calculated by information from Tax Workbook and other pre systems Definition of core KPIs KPIs Definition effective tax rate present value of taxes present value quota tax on expenses ordinary tax on ordinary earnings extraordinary tax on extraordinary earnings volume of current taxes = current and deferred tax expenses / earnings before taxes = tax year 1/(1+i) + tax year 2/(1+i)2 + tax year 3/(1+i)3 ... = present value tax / present value EBT = tax expenses / total expenses = ordinary tax expenses / total ordinary earnings = extraordinary tax expenses / total extraordinary earnings = total amount of current taxes Profitability volume of DTA volume of DTL tax asset and liability quota tax cash flow tax cash flow quota average duration of deferred tax assets average duration of deferred tax liabilities = total amount of DTA = total amount of DTL = deferred tax assets / (deferred tax liability + tax provisions) = cash flow tax = cash flow tax / cash flow operations = (Σ deferred tax assets x remaining time in accounts) / deferred tax assets = (Σ deferred tax liabilities x remaining time in accounts) / deferred tax liabilities Liquidity expected value of tax audit losses volatility of tax audit losses volatility of ETR average expiration of TLCF volume of TLCF tax provisions for risks = probability of expected tax payments x expected tax payments = standard deviation between exp. loss year 1 and average exp. loss over time = standard dev. between group ETR year 1 and average group ETR over time = Σ (yearly amount of TLCF x remaining time) / total amount of TLCF = total amount of TLCF = tax provisions for risks Risk optimization/ Flexibility

Content Profitability Liquidity Risk Optimization and Flexibility

KPI description Effective tax rate Goal: Maximum of profitability
KPI: Effective tax rate (ETR) Explanation / Cause-effect-relations: The globalization of the capital markets requires a generally accepted indicator to assess a company‘s tax position. By using the ETR a comparison of the tax positions of internationally acting com-panies is possible. The ETR is the core KPI for internal and external communi-cation purposes. Its focus is on current as well as on future tax expenses (i.e. deferred taxes). Definition: Target figure: 27% Current and deferred tax expenses * 100 Net income before tax [%] Usage: - planning - forecast - reporting - … x x x . Addressees: - GTG - Mmanagement - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x x x x x Data source: TaxWorkBook Responsibility: Mr. xy, x

KPI description Present value of taxes Goal: Maximum of profitability
KPI: Present value of taxes Explanation / Cause-effect-relations: Der Barwert der potenziellen Steuer-zahlungen prognostiziert und bewertet die zukünftigen Steuerzahlungen über den Planungszeitraum der Gesellschaft und lässt somit zeitraumübergreifende Steuerbelastungsvergleiche unterschied-licher Szenarien zu. Definition: Target figure: Die Zielgröße hängt vom jeweiligen Planungsfokus ab. Wegen des profita- bilitätsmindernden Charakters von Steuern ist generell ein Zielwert von 0 Euro wünschenswert. Current tax year 1 Current tax year 2 1 + i (1 + i)2 [Euro] + Usage: - planning - forecast - reporting - … x x Addressees: - GTG - Mmanagement - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x . x x . Data source: TWB Responsibility: Mr. xy, .

KPI description Present value quota Goal: Maximum of profitability
KPI: Present value quota Explanation / Cause-effect-relations: Die Barwertquote setzt den Barwert der zukünftigen Steuerzahlungen mit dem Barwert des operativen Ergebnisses in Relation. Sie enthält somit einen dyna-mischen Deckungsgrad der Steuer-zahlung durch das operative Ergebnis des betrachteten Unternehmens und stellt eine dynamisierte, zukünftige Steuerbelastungsquote dar. Definition: Target figure: ... % Present value tax *100 Present value EBT [%] Usage: - planning - forecast - reporting - … x x Addressees: - GTG - Mmanagement - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x Data source: TWB, Responsibility: Mr. xy,

Ordinary tax on ordinary earnings
KPI description Ordinary tax on ordinary earnings Goal: Maximum of profitability KPI: Ordinary tax on ordinary earnings Explanation / Cause-effect-relations: Die gewöhnliche Steueraufwandsquote ermittelt die Relation zwischen gewöhn-lichem Steueraufwand und gewöhn-lichem Ergebnis. Sie eliminiert außer-ordentliche Effekte und stellt damit ein Maß für die relative steuerliche „Normal-belastung“ des Unternehmens dar. Definition: Target figure: ... % Ordinary tax expenses * 100 Total ordinary earnings [%] Ordinary tax expenses = tax expenses without extraordinary taxes (as capital gains tax) Ordinary earnings = EBT without capital gains etc. Usage: - planning - forecast - reporting - … x x Addressees: - GTG - Mmanagement - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x Data source: TWB Responsibility: Mr. xy,

Extraordinary tax on extraordinary earnings
KPI description Extraordinary tax on extraordinary earnings Goal: Maximum of profitability KPI: Extraordinary tax on extraordinary earnings Explanation / Cause-effect-relations: Die außerordentliche Steueraufwands-quote stellt die Relation von außerge-wöhnlichem Steueraufwand zu außer-ordentlichem Ergebnis dar. Sie macht die außerordentliche Steuerbelastung durch einmal auftretende Sondereffekte transparent und setzt sie mit dem zuge-hörigen Ergebnisanteil in Beziehung. Definition: Target figure: ... % Extraordinary tax expenses * 100 Total extraordinary earnings [%] Extraordinary tax expenses = capital gain tax + other extraordinary tax expenses corporate tax + other extra-ordinary tax expenses local tax Usage: - planning - forecast - reporting - … x Extraordinary earnings = capital gain + tax free revenues - extraordinary expenses x Addressees: - GTG - Mmanagement - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x Data source: TWB Responsibility: Mr. xy,

Volume of current taxes
KPI description Volume of current taxes Goal: Maximum of profitability KPI: Volume of current taxes Explanation / Cause-effect-relations: Die Summe der laufenden Steuern ist die originäre Höhe der tatsächlichen durch Steuerbescheid festgesetzten Steuern, die entweder schon gezahlt wurden oder kurzfristig gezahlt werden müssen. Sie enthält keine rein bilanziell entstandenen Steuerlatenzen. Definition: Target figure: ... Euro Upper interval limit ... Euro Lower interval limit: ... Euro Kann nicht pauschal festgelegt werden, da abhängig vom Planungsobjekt und von Rahmenbedingungen (z.B. PBT) Total amount of current taxes [Euro] Actual tax payments and increase of tax provisions Usage: - planning - forecast - reporting - … x x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x x x x x Data source: TWB Responsibility: Mr. xy, x

KPI description Tax on expenses Goal: Maximum of profitability
KPI: Tax on expenses Explanation / Cause-effect-relations: Die Steueraufwandsquote ermittelt den Anteil des Steueraufwands am Gesamt-aufwand des betrachteten Unterneh-mens. Sie ermöglicht so einen Auf-wandsstrukturvergleich zwischen unterschiedlichen Unternehmen. Definition: Target figure: ... % Current + deferred tax expenses * 100 Total expenses [%] Usage: - planning - forecast - reporting - … x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x Data source: TWB Responsibility: Mr. xy,

KPI description Volume of current taxes Goal: Maximum of profitability KPI: Volume of deferred taxes Explanation / Cause-effect-relations: Latente Steuern ergeben sich aus der Differenz von Steuerbilanz und Handelsbilanz. Die Veränderung dieser temporären Differenzen zwischen zwei Perioden fließt als Ertrag oder Aufwand in die Gewinn- und Verlustrechnung. Definition: Target figure: ... Euro Volume of deferred differences movement * tax rate [Euro] Volume of deferred taxes = movement of DTL – movement of DTA Usage: - planning - forecast - reporting - … x x x Addressees: - GTG - Mmanagement - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x x x x x Data source: TWB Responsibility: Mr. xy, x

Non-tax-deductible expenses (NTDE)
KPI description Non-tax-deductible expenses (NTDE) Goal: Maximum of profitability KPI: Non-tax-deductible expenses (NTDE) Explanation / Cause-effect-relations: A tax deduction or a tax-deductible expense represents an expense incurred by a taxpayer that is subtracted from gross income and results in a lower overall taxable income, no tax exemption. Definition: Target figure: ... Euro Upper interval limit ... Euro Lower interval limit: ... Euro Kann nicht pauschal festgelegt werden, da abhängig von gesetzlichen Rahmen- bedingungen Total amount of expenses, which are not tax deductible [Euro] Usage: - planning - forecast - reporting - … x x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x x x x Data source: TWB, statutory requirements Responsibility: Mr. xy, GTG

KPI description Tax exempt income Goal: Maximum of profitability
KPI: Tax exempt income Explanation / Cause-effect-relations: Many types of income and benefits may be exempt from income taxes to some limited extent, because of how they were received, such as educational scholarships, gifts, inheritances, combat pay to military personnel, income from local bonds, employee discounts, payments for personal injuries, and life insurance proceeds. Definition: Target figure: ... Euro Upper interval limit ... Euro Lower interval limit: ... Euro Kann nicht pauschal festgelegt werden, da abhängig von gesetzlichen Rahmen- bedingungen Total amount of income, for which no taxes have to be paid [Euro] Usage: - planning - forecast - reporting - … x x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x x Data source: TWB, statutory requirements Responsibility: Mr. xy, GTG

Withholding taxes (WHT)
KPI description Withholding taxes (WHT) Goal: Maximum of profitability KPI: Volume of withholding taxes (WHT) Explanation / Cause-effect-relations: WHT is an amount withheld by the party making payment to another (payee) and paid to the taxation authorities. The payee is assessed on the gross amount, and the tax to be withheld is computed in that assessment. The purpose of WHT is to facilitate or accelerate collection, by collecting tax from payers rather than a much greater number of payees, and by collecting tax from payers within the jurisdiction rather than payees who may be outside the jurisdiction. Definition: Target figure: ... Euro Upper interval limit ... Euro Lower interval limit: ... Euro Total amount of withholding taxes [Euro] Usage: - planning - forecast - reporting - … x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x Data source: TWB Responsibility: Mr. xy, GTG

KPI description Tax credits Goal: Maximum of profitability
KPI: Tax credits Explanation / Cause-effect-relations: Within the Australian, Canadian, UK, French, and US tax systems, a tax credit is a recognition of partial payment already made towards tax due. This situation arises e.g., when standard rate tax has been deducted at source (WTH), but the tax-payer is subject to further taxation at a higher rate. It also applies in dividend imputation systems. In some countries (e.g. UK), "tax credit" refers to tax treated as deducted at source, which has not actually been deducted or paid. Definition: Target figure: ... Euro Upper interval limit ... Euro Lower interval limit: ... Euro Total amount of tax credits [Euro] Usage: - planning - forecast - reporting - … x x Addressees: - GTG - Mmanagement - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x Data source: TWB, statutory requirements Responsibility: Mr. xy, GTG

Volume of deferred tax assets
KPI description Volume of deferred tax assets Goal: Satisfactory level of liquidity KPI: Volume of deferred tax assets (DTA) Explanation / Cause-effect-relations: Die Höhe der aktiven latenten Steuern bildet sich aus der Differenz zwischen handelsrechtlichen und steuerrechtlichen Wertansätzen von Bilanzaktiva oder Bilanzpassiva, die zu potenziellen Steuerrückerstattungen in Zukunft führen. Sie stellen somit potenzielle Ansprüche gegenüber dem Fiskus dar. Definition: Target figure: ... Euro Upper interval limit ... Euro Lower interval limit: ... Euro Total amount of DTA [Euro] ∑ (IFRS-value – tax book value per asset) * tax rate, if amount < 0 + liability) * tax rate, if amount > 0 Usage: - planning - forecast - reporting - … x x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x x x x x Data source: TWB Responsibility: Mr. xy, GTG x

Volume of deferred tax liabilities
KPI description Volume of deferred tax liabilities Goal: Satisfactory level of liquidity KPI: Volume of deferred tax liabilities (DTL) Explanation / Cause-effect-relations: Passive latente Steuern resultieren aus Wertdifferenzen zwischen handels- und steuerrechtlichen Wertansätzen von Bilanzaktiva oder Bilanzpassiva, die zu potenziellen Steuernachzahlungen führen. Sie stellen somit eine zukünftige Steuerlast gegenüber dem Fiskus dar. Definition: Target figure: ... Euro Upper interval limit ... Euro Lower interval limit: ... Euro Total amount of DTL [Euro] ∑(IFRS-Value – tax book value per asset) * tax rate, if amount > 0 + ∑ (IFRS-value – tax book value per liability) * tax rate, if amount < 0 Usage: - planning - forecast - reporting - … x x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x x x x x Data source: TWB Responsibility: Mr. xy, GTG x

Tax asset and tax liability quota
KPI description Tax asset and tax liability quota Goal: Satisfactory level of liquidity KPI: Tax asset and tax liability quota Explanation / Cause-effect-relations: Das Verhältnis zwischen aktiven und passiven latenten Steuern zeigt die bilanzielle Liquiditätswirkung / das bilanzielle Finanzierungs- bzw. Kapital-bindungspotenzial, das aus den latenten Steuern herrührt. Ist die Quote größer als eins zeigt sie gleichzeitig Abschrei-bungsbedarf der aktiven latenten Steuern an. Definition: Target figure: >100 % Deferred tax assets * 100 Deferred tax liabilities + tax provisions [%] Usage: - planning - forecast - reporting - ... x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x Data source: TWB Responsibility: Mr. xy, GTG

Deferred tax asset valuation allowances
KPI description Deferred tax asset valuation allowances Goal: Satisfactory level of liquidity KPI: Deferred tax asset valuation allowances Explanation / Cause-effect-relations: Companies accrue for the tax benefit expected to be received in future years if, in the judgment of management, it is "more likely than not" that the company will receive the tax benefits. If after conducting the periodic review, management determines that the realization of the tax asset does not meet the "more-likely-than-not" criteria, an offsetting valuation allowance is recorded thereby reducing net earnings and the deferred tax asset in that period. Definition: Target figure: ... Euro Upper interval limit ... Euro Lower interval limit: ... Euro Total movement of DTA due to DTA valuation allowances [Euro] Usage: - planning - forecast - reporting - ... x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x Data source: TWB Responsibility: Mr. xy, GTG

Volume of deferred tax liabilities quasi equity
KPI description Volume of deferred tax liabilities quasi equity Goal: Satisfactory level of liquidity KPI: Volume of deferred tax liabilities quasi equity Explanation / Cause-effect-relations: DTLs can be permanent, and instead of reflecting a future tax payment, the DTL might be more similar to equity. Because many companies are growing and continually adding PP&E, the difference in depreciation methods never reverses, and the DTLs related to depreciation are more like equity than liabilities. Definition: Target figure: ... Euro Upper interval limit ... Euro Lower interval limit: ... Euro Total amount of DTL, which are more like equity than liabilities [Euro] Usage: - planning - forecast - reporting - ... x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x Data source: TWB Responsibility: Mr. xy, GTG

KPI description Tax cash flow Goal: Satisfactory level of liquidity
KPI: Tax cash flow Explanation / Cause-effect-relations: Der Steuer-Cash-flow zeigt den tatsäch-lichen Liquiditätsabfluss durch Steuern im betrachteten Jahr an und dient somit der Liquiditätsplanung. Er gibt an, in welcher Höhe Finanzmittel durch Steuer-zahlungen aus dem Zahlungsmittel-bestand des Unternehmens insgesamt abgeflossen sind. Definition: Target figure: ... Euro Cash flow tax [Euro] Cash flow tax = current taxes + payments from prior periods – increase of unpaid tax provisions for next period Usage: - planning - forecast - reporting - ... x x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x x x x x Data source: TWB Responsibility: Mr. xy, GTG x

KPI description Tax cash flow quota
Goal: Satisfactory level of liquidity KPI: Tax cash flow quota Explanation / Cause-effect-relations: Die Relation zwischen Steuer-Cash-Flow und dem operativen Cash-Flow zeigt an, welcher Anteil des operativen Cash-Flows durch Steuerzahlungen ver-braucht wird. Sie ist damit ein Indikator für die verbleibende Liquidität der be-trachteten Gesellschaft. Definition: Target figure: ... % Cash flow tax Cash flow operations [%] Usage: - planning - forecast - reporting - ... x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x Data source: TWB, SQL Responsibility: Mr. xy, GTG

KPI description Cash Tax Rate Goal: Maximum of profitability
KPI: Cash Tax Rate ( Total Tax Contribution) Explanation / Cause-effect-relations: A company's overall tax contribution is a measure of the cost of all taxes borne by the company, including labour taxes or contributions borne by the employer, as well as corporate income tax. The Cash Tax Rate adds up all taxes and mandatory contributions borne by the company and expresses the total as a percentage of profits. Definition: Target figure: ... % (Volume of current tax paid + Volume of other Taxes) / NIBT [%] Usage: - planning - forecast - reporting - … x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x x Data source: TWB Responsibility: Mr. xy, GTG

Average duration of deferred tax assets
KPI description Average duration of deferred tax assets Goal: Satisfactory level of liquidity KPI: Average duration of deferred tax assets (DTA) Explanation / Cause-effect-relations: Die durchschnittliche Bindungsdauer der aktiven latenten Steuern zeigt die durchschnittliche verbleibende Verweil-dauer dieser Aktiva an. Je höher die Dauer ist, um so länger müssen bilan-zielle Passiva (im Regelfall passive latente Steuern) zur Finanzierung dieser Aktiva bereitgestellt werden. Definition: Target figure: ... years Σ (DTA x remaining time in accounts) DTA [years] To be splitted into „affecting“ and „non-affecting“ in the reporting. Usage: - planning - forecast - reporting - ... x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x Data source: TWB Responsibility: Mr. xy, GTG

Average duration of deferred tax liabilities
KPI description Average duration of deferred tax liabilities Goal: Satisfactory level of liquidity KPI: Average duration of deferred tax liabilities (DTL) Explanation / Cause-effect-relations: Die durchschnittliche Bindungsdauer der passiven latenten Steuern zeigt die zeitliche Bindung dieser Passiva an, und damit die zeitgleiche zinslose bilanzielle Finanzierung entsprechender Aktiva. Primär sind hierfür zunächst die aktiven latenten Steuern zu verwenden. Definition: Target figure: ... years Σ (DTL x remaining time in accounts) DTL [years] To be splitted into „affecting“ und „non-affecting“ in the reporting. Usage: - planning - forecast - reporting - ... x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x Data source: TWB Responsibility: Mr. xy, GTG

Expected value of tax audit losses/findings
KPI description Expected value of tax audit losses/findings Goal: Satisfactory level of risk optimization and flexibility KPI: Expected value of tax audit losses/findings Explanation / Cause-effect-relations: Der Erwartungswert gibt den wahr-scheinlichen Umfang der Steuernach-zahlungen aufgrund von Betriebsprüfun-gen an. Er setzt sich zusammen aus der vom Steuerexperten geschätzten Wahr-scheinlichkeit der Inanspruchnahme multipliziert mit der potenziellen Höhe dieser betriebsprüfungsbedingten Nachzahlungen. Definition: Target figure: ... Euro Probability of expected tax payments x expected tax payments [Euro] Usage: - planning - forecast - reporting - ... x x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x x Data source: offen Responsibility: Mr. xy, GTG

Volatility of tax audit losses
KPI description Volatility of tax audit losses Goal: Satisfactory level of risk optimization and flexibility KPI: Volatility of tax audit losses Explanation / Cause-effect-relations: Die Schwankungsbreite der Betriebs-prüfungsverluste ist ein Risikomaß zur Messung der potenziellen steuerlichen Nachzahlungen einer Betriebsprüfung. Im Zeitverlauf ist sie ein Indikator der Entwicklung der steuerlich eingegan-genen Risiken / Anerkennungstrends des Unternehmens bei Betriebs-prüfungen. Definition: Target figure: ... % Standard deviation between expected loss year 1 and average expected loss over time [%] Usage: - planning - forecast - reporting - ... = √ ∑ ( exp. l. year x – average exp. l.) x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x Data source: ... Responsibility: Mr. xy, GTG

KPI description Volatility of ETR
Goal: Satisfactory level of risk optimization and flexibility KPI: Volatility of ETR Explanation / Cause-effect-relations: Die Abweichung der ETR von ihrem Durchschnitt im Zeitablauf zeigt die Schwankungsbandbreite der ETR an und ist ein Gesamtindikator der Trend-entwicklung für die Steuerpolitik und die Abweichung vom langfristigen Durch-schnitt des Gesamtkonzerns. Definition: Target figure: ... % Standard deviation between group ETR year 1 and average group ETR over time [%] Usage: - planning - forecast - reporting - ... = √ ∑ (ETR year x – average ETR) x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x x x Data source: TWB Responsibility: Mr. xy, GTG x

KPI description Volume of TLCF
Goal: Satisfactory level of risk optimization and flexibility KPI: Volume of TLCF (Tax loss carried forward) Explanation / Cause-effect-relations: Die Summe der Verlustvorträge zeigt die historisch entstandenen, noch nicht ver-wendeten Verluste an. In gleicher Höhe können zukünftig Gewinne verrechnet werden, ohne dass eine Besteuerung eintritt. Das ermöglicht somit steuerliche Flexibilität in der Allokation von Gewin-nen auf einzelne Gesellschaften und beeinflusst die Höhe der laufenden Steuerzahlung. Definition: Target figure: ... Euro Total amount of TLCF (sum of ordinary, state tax and capital losses) [Euro] = ∑ TLCF per expiration year Usage: - planning - forecast - reporting - ... x x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x x x x Data source: TWB Responsibility: Mr. xy, GTG x

Average expiration of TLCF
KPI description Average expiration of TLCF Goal: Satisfactory level of risk optimization and flexibility KPI: Average expiration of TLCF Explanation / Cause-effect-relations: Die durchschnittliche Restlaufzeit von Verlustvorträgen zeigt die durchschnittliche zeitliche Dauer an, in der Verlustvorträge als zukünftiges Gewinnverrechnungspotenzial noch zur Verfügung stehen. Je kürzer die durchschnittliche Restgültigkeitsdauer der Verlustvorträge, um so dringlicher die Zuweisung von Gewinnen, da nach Ablauf keine steuerreduzierenden Effekte mehr wirken. Definition: Target figure: ... years Σ (yearly amount of TLCF x remaining time) total amount of TLCF [years] Usage: - planning - forecast - reporting - ... x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x x Data source: TWB Responsibility: Mr. xy, GTG

Current expiration of TLCF
KPI description Current expiration of TLCF Goal: Satisfactory level of risk optimization and flexibility KPI: Current expiration of TLCF Explanation / Cause-effect-relations: Die tatsächliche Restlaufzeit von Verlustvorträgen zeigt die zeitliche Dauer an, in der Verlustvorträge als zukünftiges Gewinnverrechnungspoten-zial noch zur Verfügung stehen. Je kürzer die Restgültigkeitsdauer der Verlustvorträge, um so dringlicher die Zuweisung von Gewinnen, da nach Ablauf keine steuerreduzierenden Effekte mehr wirken. Definition: Target figure: ... years remaining time of TLCF [years] Usage: - planning - forecast - reporting - ... x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x x Data source: TWB Responsibility: Mr. xy, GTG

Tax provisions for risks
KPI description Tax provisions for risks Goal: Satisfactory level of risk optimization and flexibility KPI: Tax provisions for risks Explanation / Cause-effect-relations: Die Rückstellungen für steuerliche Risiken sind bewertete potenzielle steu-erliche Nachzahlungsrisiken des Unter-nehmens, die jedoch noch nicht den Charakter einer sicheren Verbindlichkeit haben. Sie stellen somit das vollständige monetäre, aktuell bereits ersichtliche und bilanzierungswürdige Ausmaß des Steuerrisikos dar. Definition: Target figure: ... Euro Upper interval limit ... Euro Lower interval limit: ... Euro Total amount of tax provisions for risks [Euro] as per IFRS-accounts Usage: - planning - forecast - reporting - ... x x x Addressees: - GTG - Management - External stakeholders Frequency: - monthly - quarterly - yearly Level: - legal entity - group - country - region - SBU x x x x x x Data source: TWB Responsibility: Mr. xy, GTG

BACKUP

Effective tax rate (ETR)
Goal: Maximum of profitability KPI: Effective tax rate (ETR) Explanation / Cause-effect-relations: Der Unterschied zur „klassischen“ Steuerplanung liegt in der Berechnungsweise der ETR. Dem Gewinn vor Steuern einer Periode wird die Summe aus aktuellem und latentem Steueraufwand gegenübergestellt. Die Dimension der Kennzahl ist damit „%“. Zukünftige Steuerzahlungen und Steuererstattungen gehen über den latenten Steueraufwand bzw. –ertrag in die Kennzahl ein, wobei der Zeitpunkt der Realisation des Steueraufwandes / -ertrages jedoch unerheblich ist. Steuerlatenzen ergeben sich durch Differenzen im Bilanzansatz eines Vermögensgegenstandes oder einer Schuld zwischen Handels- und Steuerbilanz. Diese Differenzen können sowohl dem Grunde als auch der Höhe nach bestehen. Im Unterschied zur „klassischen“ Steuerplanung werden bei der Berechnung der ETR nur Sachverhalte betrachtet, die in der Berichtsperiode oder in vorangegangenen Perioden wirtschaftlich verursacht wurden. Planzahlen sind in der Regel zur Berechnung der Kennzahl nicht erforderlich. Eine Ausnahme hiervon bildet der Ansatz oder die Veränderung von aktiven latenten Steuern auf Verlustvorträge, die nur dann gebildet werden dürfen, wenn eine zukünftige Nutzung zumindest wahrscheinlich (Prognose: „more likely than not“) ist.

KPI description Present value quota Goal: Maximum of profitability
KPI: Present value quota Explanation / Cause-effect-relations: Durch gezielte Sachverhaltsgestaltung sowie durch die Nutzung von Wahlrechten und Spielräumen werden Aufwendungen zeitlich vorgezogen, Erträge in spätere Perioden verlagert und Verlustvorträge möglichst frühzeitig genutzt. Der in der Steuerrechnung auszuweisende Gewinn, welcher die Bemessungsgrundlage der Besteuerung darstellt, wird möglichst weit in die Zukunft verlagert. Hierdurch steigt der Kapitalwert einer Investition, da die zu leistenden Steuerzahlungen in stärkerem Maße der Abzinsung unterliegen. Im Nenner der „Present Value Quota“ steht der über den Planungszeitraum erwartete Profit Before Tax, der nach den Maßgaben der IFRS ermittelt und ebenfalls auf den Planungszeitpunkt abgezinst wurde. Auf diese Weise ergibt sich eine Kennzahl mit einem Wertebereich zwischen (in der Regel) 0 und 1, die im Gegensatz zur ETR den Zeitpunkt der Steuerzahlung und damit den Abfluss liquider Mittel berücksichtigt. Die Ermittlung der Kennzahl zu Planungszwecken ist an die Verfügbarkeit von Prognosen über Ergebnis- und Zahlungsgrößen gebunden. Der Planungsgegenstand ist dabei flexibel zu definieren und kann ein einzelnes Projekt, eine Legaleinheit, einen Geschäftsbereich, regionale / überregionale Aggregate oder den gesamten Konzern umfassen.

KPI description Ordinary tay on ordinary earnings / Extraordinary tax on extraordinary earnings Goal: Maximum of profitability KPI: Ordinary tax on ordinary earnings / Extraordinary tax on extraordinary earnings Explanation / Cause-effect-relations: Die Aufteilung des gesamten Steueraufwandes in solchen aus laufendem Einkommen und solchem aus außerordentlichem Einkommen ermöglicht eine getrennte Analyse beider Komponenten. Auf diese Weise können steuerlastmindernde und steuerlasterhöhende Effekte, die aus steuerlichen Sonderregelungen für außerordentliche Geschäftsvorfälle herrühren, isoliert betrachtet werden. Dies soll Planungsaktivitäten unterstützen, die nicht das operative Geschäft betreffen w.z.B. Sitzverlagerungen, Akquisitionen, Divestments. Gleichzeitig ist die Steuerquote, mit der das laufende Einkommen belastet wird, frei von Sondereffekten zu erkennen. Planungsobjekte, die hierauf Auswirkungen haben könnten beispielsweise Leasing- oder Finanzierungsmodelle sein. Die Zuordnung der Ordinary / Extraordinary Taxes zu den jeweiligen Einkünften ist schwierig. Im Prinzip müsste geschäftsvorfallbezogen vorgegangen werden und es müssten die jeweils anzuwendenden „Sonderregelungen“ der Jurisdiktion, in der die außerordentlichen Einkünfte erwirtschaftet werden, bekannt sein. Hilfsweise kann auf die Angaben im TWB zurückgegriffen werden. Dies ist zu Planungszwecken aber nur eingeschränkt zielführend.

Volume of DTA/DTL / Tax asset and tax liablility quota
KPI description Volume of DTA/DTL / Tax asset and tax liablility quota Goal: Satisfactory level of liquidity KPI: Volume of DTA and DTL / Tax asset and tax liability quota Explanation / Cause-effect-relations: Die absolute Höhe der DTA / DTL ist zunächst ein Hinweis auf den Grad der Abweichung zwischen der Steuerrechnung in der (den) jeweiligen Jurisdiktion(en) und der Bilanzierung nach IAS/IFRS (qualifizierter würde die Aussage, wenn die DTA / DTL ins Verhältnis zur Bilanzsumme gesetzt würden!). Die absolute Höhe der DTA kann darüber hinaus als Risikotreiber angesehen werden, da durch die Änderungen der Werthaltigkeit der Position steuerlicher Aufwand in Form einer Valuation Allowance entstehen kann. Inwieweit ein solches Impairment der DTA Position erfolgswirksam wird, hängt davon ab, ob jene erfolgswirksam oder erfolgsneutral gebildet wurde. Um über die zukünftigen Erfolgswirkungen der Positionen DTA und DTL Klarheit zu gewinnen, sollen die entsprechenden KPIs nach diesem Kriterium unterteilt werden. Werden die Positionen DTA und DTL ins Verhältnis gesetzt, so kann die sich ergebende Quote als Indikator für die Nutzbarkeit der DTA interpretiert werden. Das Verhältnis zwischen aktiven und passiven latenten Steuern zeigt die bilanzielle Liquiditätswirkung / das bilanzielle Finanzierungs- bzw. Kapital-bindungspotenzial, das aus den latenten Steuern herrührt. Ist die Quote größer als eins zeigt sie gleichzeitig Abschreibungsbedarf der aktiven latenten Steuern an.

Cause-effect-relations of KPIs
The illustration of the cause-effect-relations of KPIs enables the future users to overview a tax management approach Cause-effect-relations of KPIs Tax on expenses NTDE Others Effective tax rate Volume of Current tax Tax exempt income WTH Volume of deferred tax Volatility of ETR Volume of TLCF Tax Credits Present value of taxes Extra/Ordinary tax on extra/ordinary earnings Current expiration of TLCF Profitabilität Tax on DD movem Volume of deferred diff movement Volume of DTA Present value quota DTA Valuation allowances Average duration of DTA / DTL Expected reversal amount of DTA / DTL Tax Value added Volume of other Taxes DTA against equity Tax cash flow Liquidität Average expiration of TLCF Volume of Current tax paid Volume of DTL Tax cash flow quota Expected value of tax audit findings DTL from PPA Cash Tax Rate Volume of DTL quasi equity Volatility of tax audit losses DTL against equity Tax provisions for risks Volume of current tax risks Risk Volatility of ETR

Drivers of KPIs - overview
Most of the necessary data to calculate the KPIs stem from the Tax Workbook Drivers of KPIs - overview Total Tax Rate Corporation Tax Deferred Assets / Deferred Liabilities Current Tax Losses (volume / expiration) Local / State Tax Tax Credits Current Tax Accruals Data from TOPAS Data from other sources 1 2 3 4 5 6 7 8 9

Driver tree per TWB category
Total tax rate Corporation tax incl. surcharge tax Reduced corporate tax Total Tax Rate Increased corporate tax Tax rates for capital gains / capital losses Driver trees do only illustrate the cause-effect- relations; calculation in accordance with TWB. Local tax rate

Corporation tax Corporation tax Net income before taxes on income (as per IAS Accounts) Elimination of profits and losses due to a profit and loss absorption agreement Capital gain tax Elimination of partnership income received Non-deductible expenses Tax-exempt income Income taxes separately Corporation Tax Surcharge taxes Capital gains / capital losses in current year Permanent differences from (sub-) consolidation level Deductible other income taxes / GewSt Tax creditable Deductible income taxes / WHT Tax credits deductible Tax base transfer received from partnerships Tax base tansfer received from corporation due to fiscal unity Other modifications Tax base transfer transferred as partnerships Tax base tansfer transferred as corporation due to fiscal unity Utilization of loss carryforwards Corporation tax increase / reduction

Deferred assets / deferred liabilities (volume / average remaining time) Sundry intangible assets DTA - except tax credits Accounts payable to affiliated comp. Assets similar to goodwill Other deferred charges Accounts payable to associated comp. Goodwill Equity (except NIBT on income) Accounts payable to other investments Tangible assets NIBT on income Tax liabilities - income tax Financial assets Shares in consolidated group companies held by third parties Tax liabilities - others Inventories Provisions for pensions and similar obligations Derivatives, liabilities Accounts receivable trade and services incl. notes Provisions for other post-employment benefits Other liabilities Deferred assets / deferred liabilities Accounts receivable from affiliated companies Deferred tax provisions - except tax cushions Deferred income Accounts receivable from associated companies Deferred tax provisions - tax cushions Assets similar to goodwill - depriciation Accounts receivable from other investments Deferred tax provisions - taxes on attributable income Sundry intangible assets- depriciation Derivatives, assets Tax provisions - taxes on income Tangible assets - depriciation Other assets - except any taxes Tax provisions - other taxes Financial assets - depriciation Other assets - taxes on income Sundry provisions Inventories - depriciation Other assets - other taxes Financial liabilities Others - depriciation Cash / marketable securities Loans payable to social insurances Other taxfree reserves Debt discount Accounts payable trade & services SOPO §6b EStG (Germany)

Driver tree per KPI Effectice tax rate Effective tax rate
Total tax rate detailed driver tree, see page 46 Corporation tax detailed driver tree, see page 47 Deferred assets (volume) / deferred liabilities (volume) detailed driver tree, see page 48 Effective tax rate Current tax losses detailed driver tree, see page 52 Local / state tax detailed driver tree, see page 54 Tax credits detailed driver tree, see page 55 EBT

Driver tree per KPI Present value of taxes Present value of taxes
Total tax rate detailed driver tree, see page 46 Corporation tax detailed driver tree, see page 47 Current tax losses detailed driver tree, see page 52 Present value of taxes Local / state tax detailed driver tree, see page 54 Tax credits detailed driver tree, see page 55 Interest

Driver tree per KPI Present value quota Present value quota
Current tax losses Local / state tax Corporation tax Total tax rate Tax credits detailed driver tree, see page 46 see page 47 see page 52 see page 54 see page 55 Interest EBT

Current tax losses (volume) PROPOSAL Current tax losses (volume) Volume of tax credits (unutilized) - local/state tax / GewSt - - capital losses - - corporate tax -

Current tax losses (expiration) Expiring in 2006 Expiring in 2007 Expiration of tax credits - corporate tax - Expiring in 2008 Expiring in 2009 Expiring in later than 2009 No Expiration Expiring in 2006 Expiring in 2007 Current tax losses (expiration) Expiration of tax credits - local/state tax / GewSt - Expiring in 2008 Expiring in 2009 Expiring in later than 2009 No Expiration Expiring in 2006 Expiring in 2007 Expiration of tax credits - capital losses - Expiring in 2008 Expiring in 2009 Expiring in later than 2009 No Expiration

Local / state tax Add-ons state tax Subtractions state tax Corrections prior year Local / State Tax Tax base transfer received from corporations due to fiscal unity Tax base transfer received from partnerships Tax base transfer transferred from corporations due to fiscal unity Tax base transfer transferred from partnerships

Tax credits (volume) Volume of tax credits (unutilized) - foreign tax credits - Tax credits (volume) Volume of tax credits (unutilized) - R&D tax credits - Volume of tax credits (unutilized) - other -

Tax credits (expiration) Expiring in 2006 Expiring in 2007 Expiration of tax credits - foreign tax credits - Expiring in 2008 Expiring in 2009 Expiring in later than 2009 No Expiration Expiring in 2006 Expiring in 2007 Tax credits (expiration) Expiration of tax credits - R&D tax credits - Expiring in 2008 Expiring in 2009 Expiring in later than 2009 No Expiration Expiring in 2006 Expiring in 2007 Expiration of tax credits - other - Expiring in 2008 Expiring in 2009 Expiring in later than 2009 No Expiration

Driver tree per KPI Tax on expenses Tax on expenses Total tax rate
detailed driver tree, see page 46 Corporation tax detailed driver tree, see page 47 Deferred assets (volume) / deferred liabilities (volume) detailed driver tree, see page 48 Tax on expenses Current tax losses detailed driver tree, see page 52 Local / state tax detailed driver tree, see page 54 Tax credits detailed driver tree, see page 55 Expenses

Ordinary tax on ordinary earnings
Driver tree per KPI Ordinary tax on ordinary earnings Total tax rate detailed driver tree, see page 46 Corporation tax detailed driver tree, see page 47 Deferred assets (volume) / deferred liabilities (volume) detailed driver tree, see page 48 Ordinary tax on ordinary earnings Current tax losses detailed driver tree, see page 52 Local / state tax detailed driver tree, see page 54 Tax credits detailed driver tree, see page 55 Ordinary earnings

Extraordinary tax on extraordinary earnings
Driver tree per KPI Extraordinary tax on extraordinary earnings Total tax rate detailed driver tree, see page 46 Corporation tax detailed driver tree, see page 47 Current tax losses detailed driver tree, see page 52 Extraordinary tax on extraordinary earnings Local / state tax detailed driver tree, see page 54 Tax credits detailed driver tree, see page 55 Extraordinary earnings

Driver tree per KPI Volume of current taxes Total tax rate detailed driver tree, see page 46 Corporation tax detailed driver tree, see page 47 Volume of current taxes Current tax losses detailed driver tree, see page 52 Local / state tax detailed driver tree, see page 54 Tax credits detailed driver tree, see page 55

Volume of deferred tax assets
Driver tree per KPI Volume of deferred tax assets Total tax rate detailed driver tree, see page 46 Volume of deferred tax assets Corporation tax detailed driver tree, see page 47 Deferred assets (volume) detailed driver tree, see page 48

Volume of deferred tax liabilities
Driver tree per KPI Volume of deferred tax liabilities Total tax rate detailed driver tree, see page 46 Volume of deferred tax liabilities Corporation tax detailed driver tree, see page 47 Deferred liabilities (volume) detailed driver tree, see page 48

Tax asset and liability quota
Driver tree per KPI Tax asset and liability quota Total tax rate detailed driver tree, see page 46 Tax asset and liability quota Corporation tax detailed driver tree, see page 47 Deferred assets (volume) / deferred liabilities (volume) detailed driver tree, see page 48

Driver tree per KPI Tax cash flow Tax cash flow Total tax rate
detailed driver tree, see page 46 Corporation tax detailed driver tree, see page 47 Tax cash flow Local / state tax detailed driver tree, see page 54 Tax credits detailed driver tree, see page 55

Total cash flow operations
Driver tree per KPI Tax cash flow quota Total tax rate detailed driver tree, see page 46 Corporation tax detailed driver tree, see page 47 Tax cash flow quota Local / state tax detailed driver tree, see page 54 Tax credits detailed driver tree, see page 55 Total cash flow operations

Average duration of DTA / DTL
Driver tree per KPI Average duration of DTA / DTL Deferred assets (volume) detailed driver tree, see page 48 Average duration of DTA Deferred assets (average remaining time) detailed driver tree, see page 48 Deferred liabilities (volume) detailed driver tree, see page 48 Average duration of DTL Deferred liabilities (average remaining time) detailed driver tree, see page 48

Expected value of tax audit losses / volatility of tax audit losses
Driver tree per KPI Expected value of tax audit losses / volatility of tax audit losses Expected tax payments for audit reason Expected value of tax audit losses Probability of expected tax payments for audit reason Expected tax payments for audit reason Volatility of tax audit losses Probability of expected tax payments for audit reason

Driver tree per KPI Volatility of ETR Volatility of ETR Total tax rate
detailed driver tree, see page 46 Corporation tax detailed driver tree, see page 47 Deferred assets (volume) / deferred liabilities (volume) detailed driver tree, see page 48 Volatility of ETR Current tax losses detailed driver tree, see page 52 Local / state tax detailed driver tree, see page 54 Tax credits detailed driver tree, see page 55 EBT

Average expiration of TLCF / Volume of TLCF
Driver tree per KPI Average expiration of TLCF / Volume of TLCF Current tax losses (volume and expiration) detailed driver tree, see pages 52, 53 Average expiration of TLCF Tax credits (volume and expiration) detailed driver tree, see pages 55, 56 Current tax losses (volume and expiration) detailed driver tree, see pages 52, 53 Volume of TLCF Tax credits (volume and expiration) detailed driver tree, see pages 55 ,56

Tax provision for risks
Driver tree per KPI Tax provision for risks Corporation tax Tax-exempt income Income taxes separately Capital gain tax Capital gains / capital losses in current year Permanent differences from (sub-) consolidation level Deductible other income taxes / GewSt Surcharge taxes Deductible income taxes / WHT Tax provision for risks Tax credits deductible Tax base transfer received from partnerships Tax creditable Tax base tansfer received from corporation due to fiscal unity Tax base transfer transferred as partnerships Tax base tansfer transferred as corporation due to fiscal unity Other modifications Utilization of loss carryforwards Corporation tax increase / reduction Current Tax Accruals

Tax Cockpit and KPI Definitions

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