Tax accounting algorithm

Introduction

Context

Welcome to the OpenSource Tax accounting Algorithm with Tax Impact Computation wiki page! This platform serves as a comprehensive resource for understanding and implementing a pioneering open-source algorithm specifically designed to compute and prepare the tax proof and the deffered tax report.

Objectives

The objective of this algorithm is to perform tax accounting computations on a dataset from a company, produce the tax proof and/or the deferred tax report. This algorithm allows to run the computation on an arbitrary data structure through the use of labelling systems and gives back the result at the requested level of segmentation.

Feature Overview

The algorithm will present the following features:

• Computation of the tax impact of the temporary differences, per flow;
• Inclusion of Tax losses and tax credits in the computation, with detail;
• Management of Core and Non-core analysis;
• Variable number of Reconciliation steps with configurable origin of the reconciliation;
• Central management of tax rates;
• Availability of a distinct rate basked;
• Compatibility with the Pillar 2 computation;
• Generation of the Tax proof component;
• Generation of the Deferred Tax Report.

Development Program

The Tax accounting algorithl presented in this page is an ongoing work and its documentation on this wiki is also a work in progress. It is by no means complete and definitive, and changes will occur in the upcoming weeks and months.

Both GitHub and MediaWiki are amazing tools to manage collaborative work and track the progress and modifications that happen with time.

The detailed to-do list is presented Tax accounting algorithm development program.

Data structure

Algonomia API Framework

The Tax Accounting Algorithm uses Algonomia API Framework to receive input data and send output data for the computations. In the following sections, it is assumed that data has been transferred to the Tax Accounting Algorithm using this framework.

Input

The input data follows the usual division required by the Algonomia API Framework : Data, Rules, Other.

Data

The following tables presents the data points allowed as "Data" :

Input Data Points

Role	Label	Definition	Typing	Multiplicity behavior	Mandatory
Matching	DTX Entity segmentation	Allows to define the segmentation of the data input that corresponds to the base aggregation level for the entity involved in the Tax accounting computation	Couple (String; Integer)	Several Values can be defined as "DTX Entity segmentation", but the Integer has to be unique among the set	Yes
Data segmentation	DTX Level 1		Enum : from the list of available DTX referencing tree levels	Forbidden	Yes
Data segmentation	DTX Level 2		Enum : from the list of available DTX referencing tree levels	Forbidden	Yes
Data segmentation	DTX Level 3		Enum : from the list of available DTX referencing tree levels	Forbidden	Yes
Data segmentation	DTX Level 4		Enum : from the list of available DTX referencing tree levels	Forbidden	Yes
Data segmentation	DTX Level 5		Enum : from the list of available DTX referencing tree levels	Forbidden	Yes
Data segmentation	DTX Free Account segmentation	Arbitrary segmentation level to preserve	Couple (String; Integer)	Several Values can be defined as "DTX Free Account segmentation", but the Integer has to be unique among the set	No
Data segmentation	Type of difference		Enum : from the list of available "Type of differences"	Forbidden	Yes
Data segmentation	Primary account		Enum : from the list of available "Primary account" for the selected "Type of differences"	Forbidden	Yes
Data segmentation	Sub-account		Enum : from the list of available "Sub-account" for the selected "Primary accounts"	Forbidden	Yes
Data segmentation	Nature		Enum : Base; Tax	Forbidden	Yes
Data segmentation	Step		Enum : Reporting to Separate; Separate to Contribution; Reporting to Local; Local To Tax; Tax losses and Tax credits; Local to Tax - Separate Basket	Forbidden	Yes
Data segmentation	Sign		Enum : Positive; Negative	Forbidden	Yes
Data segmentation	Expiration		Enum : Expiring in Y+0->5 (6 items); Expiring in over Y+ 5; Unlimited; Expired; N.a.	Forbidden	No
Data segmentation	Basket		Enum : Standard; Separate	Forbidden	Yes
Data segmentation	Tax rate multiplication		Enum: deferred rate; current rate	Forbidden	Yes
Flows	Opening FYN-1		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Flows	Change in opening		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Flows	True-up P&L		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Flows	Income input - core		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Flows	Income input - non core		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Flows	Income input - total		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Flows	Change in tax rate P&L (only for tax)		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Flows	Total Income (only for tax)		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Flows	Change in scope		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Flows	OCI		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Flows	Change in tax rate OCI (only for tax)		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Flows	Total OCI (only for tax)		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Flows	Reclass and Other		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Flows	CTA		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Flows	Closing		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Manual Tax rates	Opening Tax Rate		percentage	Only one value is acceptable for a given segment of the analysis, see Rule mapping	No, if required but absent, computation is aborted
Manual Tax rates	Annual Tax Rate		percentage	Only one value is acceptable for a given segment of the analysis, see Rule mapping	No, if required but absent, computation is aborted
Manual Tax rates	Closing Tax Rate		percentage	Only one value is acceptable for a given segment of the analysis, see Rule mapping	No, if required but absent, computation is aborted

Rules

The following tables presents the data points allowed as "Rules" :

Input Rules data points

Role	Label	Definition	Typing	Multiplicity behavior	Mandatory
Matching	DTX Rule segmentation	Allows to define the segmentation level of the Rule component to be retrieved	Couple (String; Integer)	Several Values can be defined as "ATP Rule segmentation", but the Integer has to be unique among the set	Yes
National taxation	DTX Consolidation Tax Rate	Input of the group's consolidation tax rate	percentage	Only one value is acceptable for a given segment of the analysis, see Rule mapping	Yes
National taxation	DTX Deferred Standard CIT rate - Opening	Input of the applicable national tax rate affecting the entity's deferred tax computation, for the Opening flows	percentage	Only one value is acceptable for a given segment of the analysis, see Rule mapping	Yes
National taxation	DTX Deferred Standard CIT rate - Current Year	Input of the applicable national tax rate affecting the entity's deferred tax computation, for the Current year flows	percentage	Only one value is acceptable for a given segment of the analysis, see Rule mapping	Yes
National taxation	DTX Deferred Standard CIT rate - Closing	Input of the applicable national tax rate affecting the entity's deferred tax computation, for the Closing year flows	percentage	Only one value is acceptable for a given segment of the analysis, see Rule mapping	Yes
National taxation	DTX Current Standard CIT rate - Opening	Input of the applicable national tax rate affecting the entity's local tax computation, for the Opening flows	percentage	Only one value is acceptable for a given segment of the analysis, see Rule mapping	Yes
National taxation	DTX Current Standard CIT rate - Current Year	Input of the applicable national tax rate affecting the entity's local tax computation, for the Current year flows	percentage	Only one value is acceptable for a given segment of the analysis, see Rule mapping	Yes
National taxation	DTX Current Standard CIT rate - Closing	Input of the applicable national tax rate affecting the entity's local tax computation, for the Closing year flows	percentage	Only one value is acceptable for a given segment of the analysis, see Rule mapping	Yes
National taxation	DTX Current Separate CIT rate - Opening	Input of the applicable separate tax rate affecting the entity's local tax computation, for the Opening flows	percentage	Only one value is acceptable for a given segment of the analysis, see Rule mapping	Yes
National taxation	DTX Current Separate CIT rate - Current Year	Input of the applicable separate tax rate affecting the entity's local tax computation, for the Current year flows	percentage	Only one value is acceptable for a given segment of the analysis, see Rule mapping	Yes
National taxation	DTX Current Separate CIT rate - Closing	Input of the applicable separate tax rate affecting the entity's local tax computation, for the Closing year flows	percentage	Only one value is acceptable for a given segment of the analysis, see Rule mapping	Yes

Output

Report Deferred Tax

Role	Label	Definition	Typing	Multiplicity behavior	Mandatory
Result Entity segmentation	DTX Entity segmentation	Allows to define the segmentation of the data input that corresponds to the base aggregation level for the entity involved in the Tax accounting computation	Couple (String; Integer)	Several Values can be defined as "DTX Entity segmentation", but the Integer has to be unique among the set	Yes
Result Data segmentation	DTX Level 1		Enum : from the list of available DTX referencing tree levels	Forbidden	Yes
Result Data segmentation	DTX Level 2		Enum : from the list of available DTX referencing tree levels	Forbidden	Yes
Result Data segmentation	DTX Level 3		Enum : from the list of available DTX referencing tree levels	Forbidden	Yes
Result Data segmentation	DTX Level 4		Enum : from the list of available DTX referencing tree levels	Forbidden	Yes
Result Data segmentation	DTX Level 5		Enum : from the list of available DTX referencing tree levels	Forbidden	Yes
Result Data segmentation	DTX Free Account segmentation	Arbitrary segmentation level to preserve	Couple (String; Integer)	Several Values can be defined as "DTX Free Account segmentation", but the Integer has to be unique among the set	No
Result Data segmentation	Type of difference		Enum : from the list of available "Type of differences"	Forbidden	Yes
Result Data segmentation	Primary account		Enum : from the list of available "Primary account" for the selected "Type of differences"	Forbidden	Yes
Result Data segmentation	Sub-account		Enum : from the list of available "Sub-account" for the selected "Primary accounts"	Forbidden	Yes
Result Flows	DT Report - Opening FYN-1		Couple (Decimal;ISO 3 Currency Code)		No, if absent and required by computation, assumed to be 0
Result Flows	DT Report - Change in opening		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DT Report - True-up P&L		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DT Report - Income input - core		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DT Report - Income input - non core		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DT Report - Income input - total		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DT Report - Change in tax rate P&L (only for tax)		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DT Report - Total Income (only for tax)		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DT Report - Change in scope		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DT Report - OCI		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DT Report - Change in tax rate OCI (only for tax)		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DT Report - Total OCI (only for tax)		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DT Report - Reclass and Other		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DT Report - CTA		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DT Report - Closing		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0

Tax proof

Role	Label	Definition	Typing	Multiplicity behavior	Mandatory
Result Entity segmentation	DTX Entity segmentation	Allows to define the segmentation of the data input that corresponds to the base aggregation level for the entity involved in the Tax accounting computation	Couple (String; Integer)	Several Values can be defined as "DTX Entity segmentation", but the Integer has to be unique among the set	Yes
Result Data segmentation	DTX Level 1		Enum : from the list of available DTX referencing tree levels	Forbidden	Yes
Result Data segmentation	DTX Level 2		Enum : from the list of available DTX referencing tree levels	Forbidden	Yes
Result Data segmentation	DTX Level 3		Enum : from the list of available DTX referencing tree levels	Forbidden	Yes
Result Data segmentation	DTX Level 4		Enum : from the list of available DTX referencing tree levels	Forbidden	Yes
Result Data segmentation	DTX Level 5		Enum : from the list of available DTX referencing tree levels	Forbidden	Yes
Result Data segmentation	DTX Free Account segmentation	Arbitrary segmentation level to preserve	Couple (String; Integer)	Several Values can be defined as "DTX Free Account segmentation", but the Integer has to be unique among the set	No
Result Data segmentation	DTX Tax proof element level 1		Enum : from the list of available "Type of differences"	Forbidden	Yes
Result Data segmentation	DTX Tax proof element level 2		Enum : from the list of available "Primary account" for the selected "Type of differences"	Forbidden	Yes
Result Data segmentation	DTX Tax proof element level 3		Enum : from the list of available "Sub-account" for the selected "Primary accounts"	Forbidden	Yes
Result Flows	DTX Tax proof values - monetary		Couple (Decimal;ISO 3 Currency Code)		No, if absent and required by computation, assumed to be 0
Result Flows	DTX Tax proof values relative entity		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DTX Tax proof values relative group		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DTX Tax proof values - monetary - core		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DTX Tax proof values relative entity - core		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DTX Tax proof values relative group - core		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DTX Tax proof values - monetary - non core		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DTX Tax proof values relative entity - non core		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0
Result Flows	DTX Tax proof values relative group - non core		Couple (Decimal;ISO 3 Currency Code)	If multiple defined, are aggregated for computation	No, if absent and required by computation, assumed to be 0

Computational steps

Data received by the algorithm are processed using the standardized Rule matching methodology. At this stage every single entry contains both the financial data and the rules to be applied.