Practical know-how of the Global Project

Hitoshi Goto

Ukihiko Takagi

In Part 4, we discussed methods to resolve the gap between headquarters and overseas subsidiaries and to lead project to success. This time, we will look at the tax and legal system that we need to know when implementing system overseas.

System implementation according to tax of each country and legal system is essential.

When implementing system overseas, dealing with tax and legal system is a significant challenge, not just ERP. Even if the consumption tax rate only changes in Japan, it takes a lot of workloads to test and check.

This is an example of T company full-scale deployment of the Global Accounting System in India.

As mentioned in Part 1 , Germany tax returns and audits were described as very complex, but India has many more taxes and also debits tax and provisional tax that need to be offset. There are also differences in the detailed display such as tax form, tax-excluded, etc thus it is complicated.

Therefore, the implementation of ERP in India requires the cooperation of consultants who are familiar with India's tax system. Compliance with legal systems is equally important.

Impact that recent legislation affects to the system is that response to EU general data protection regulation (GDPR) that put into force on 25th May, 2018. As a result, the transfer of personal data from within European Economic Area (EEA) to outside the region was prohibited in principle.

According to the European Commission, as Japan is the country that "Not having appropriate personal information protection system", it is necessary for Japanese companies to take various measures, including formulation of Binding Corporate Rules and the conclusion of standard contractual clauses(SCC). Of course, system support is also important.

Regarding location of server and security associated with the implementation of the system, laws will change with the times, but it is important to pay attention to the fact that laws may change depending on the town. In China, since the internet is also blocked by the government, it is necessary to consider the location of the database.

Involvement of experts familiar with laws and regulations is mandatory

Different laws affect the business flow and drastically change business forms(reports). Of course, this is an important point in business systems implementation.

Anyway, you need to be familiar with national and local laws and regulations (with the participation of familiar people) and proceed with the project. It is needless to say that it is important to secure a budget for that purpose.

It is important to think with local experts in the upper process (preferably in the project planning stage) as much as possible.

We summarized the main local tax and legal system that the global PMO should know to a chart.

[Chart]Examples of local tax and legal system that global PMO should know

Although it is not a law, there are also facts that people working at overseas subsidiaries do not know the company-wide standard rules established by headquarter. It is necessary to check whether the company-wide standard rules are well known. And if they are not well known, it is necessary to secure a certain man-hours and a certain period of time for the training.

<<Read [Part 4]Read [Part 6]>>

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