Define any calculation that multiplies a source account by a rate that a country can define. 

To perform a deferred tax calculation, it's necessary to have varying tax rates based on the country. Each Entity should be linked to a specific country. As a best practice, create an Audit member dedicated to storing the calculated tax amount. This makes it easy to extract and compare the calculation results. 

The Deferred Tax Calculation process also lets you use tags to choose the items that'll drive the calculation sources or targets. This makes it easier to manage your consolidation. These tools can be used for any calculation that requires adherence to consolidation rules and use different rates based on Entity, period, or Scenario.

There are several administration forms involved in implementing deferred tax. The order suggested here enables you to set up a calculation.

Define countries

You can use the Country Maintenance form to define which countries will appear on your Tax Rate input form. The country's three letter ISO code must be used in Entity Maintenance to link a country or tax system to your Entities. If you have a state or province's tax rate, you can add more places in the form to fit this. 

Define tax entities

In Entity Maintenance form, you can define the country property for each Entity in your consolidation. 

  1. Select the entity in the hierarchy editor in Models. 
  2. Select the '+' in Details to add a new Property. 
  3. Select the Country Property and find the three letter ISO code for the country associated with that Entity.
    It determines which tax rate to be picked up when consolidating this Entity.

Define other dimensions

Adjust two other dimensions to define your tax rules. In the Audit dimension, use the instructions in Manage Members to create a new member and add a #DeferredTax tag to it.

You can categorize the new Deferred Tax Audit member under an existing group of calculated Audit members. When you set up the rule, you can either select the source and target members by name in the member selector or by typing in the tag. Tags are ‌best practice if your source or target includes multiple members. The Audit member can be setup to have a tag called #DeferredTax.

You can use tags in that dimension as well to define the accounts impacted by the calculation rule.

Define tax rates

The tax rate is the percentage value that changes by Country, Scenario, and Date. This value is multiplied by a source account to calculate the deferred tax amount. 

Tax rates are defined via the Tax Rate List administration form. There values that you add here are applied across all countries.

Use Income Tax to describe your rate rather than the specific name in a given jurisdiction. These tax rate names are important to remember for the Define Tax Formulas step.

Enter tax rates

You can enter the values for the rates once the countries and rates are defined. This is done via the Tax Rates Input form. 

Note: The tax rates are entered via an Anaplan XL Reporting form rather than a Web Administration form. You can select a Scenario and the tax rates you define will appear for each active country. The time periods run across the input form. 

Define tax formulas

The Tax Formulas are used to calculate the rate that'll be applied in the Tax Rules. The Tax Formula administration form only has a single column for input‌. The Tax Formula uses the rates you have defined in the earlier Define Tax Rates step. 

For example, you may have created a tax rate called TaxN for the national tax rate. You will enter this by country, by time period, and by scenario.

If you use [TaxN] in your formula field, the rate you entered will be applied to the time period you are calculating. You can also use other settings to change the time period you are using for the calculation. 

  • You can use the opening period or the previous period in your calculation. 
  • [TaxN] will retrieve the value you have entered in the TaxN tax rate for the current period. 
  • [OpeningTaxN] will retrieve the value you have entered in the TaxN tax rate for the opening period. 
  • [PriorTaxN] will retrieve the value you have entered in the TaxN tax rate for the prior period, typically the prior month. This allows you to setup formulas that can post the delta in the tax rate to its own specific account.

Define tax rules

Use the Tax Rules administration form to define the target Account, Audit, and Movement for the result of your tax calculation. 

To define a Tax Rule:

  1. Header: In this section, define the name of the rule, the consolidation model associated with it, and the start and end Date for the calculation. When setting up rules, you should set the starting date, as this tells future administrators that you have intentionally defined this calculation. 
  2. Details: In this section, define the target of the calculation and the tax formula that'll be used for this rule. 
  3. Associate the Tax Rule to a consolidation rule where you define the source of the calculation.

For example, the results of this calculation will be posted to the Deferred Tax Audit member that you defined earlier in this process. You can specify the target Account for the calculation as well as the Movement. 

In the Tax Formula defined earlier, the sign will depend on whether the target of the calculation is a debit or credit account. If you want a different posting account based on whether the balance is positive or negative, you can use the deferred tax feature in conjunction with Account Netting.

Attach Tax Rules to Consolidation Rules

It's important to link the Tax Rule to a Consolidation Rule to calculate the tax value. This triggers the calculation based on changes in a given source.

It's best practice to associate the Tax Rule with an existing Consolidation Rule. The account multiplied by the rate to determine the tax amount is the sum of the source accounts.

If you define a single-source account, the value will be multiplied by the rate. If you define the accounts with a tag, the rate will multiply the sum of the accounts with that tag to calculate your tax amount.

Alternatively, you can also define a Deferred Tax or Provision Consolidation Rule. Specify the target Audit as the DeferredTax Audit you created and select a time period to start the calculation from.

In the calculation rule, specify the changed account that'll trigger a tax calculation. 

For example, you can use the Net Gain/Loss account in the Retained Earnings section; the source Movement as Closing, and the period as Current. Set the Repartition to 100% (or the appropriate value) and select the Tax Rule you have defined.

Calculate and verify Deferred Tax results

To see the results of the calculation, run a Consolidated Financials report under Explorer > Fluence > Consolidation > Reports. 

The By Audit report for one of the entities with the appropriate Country property shows the result of the calculation in the appropriate Deferred Tax audit member that you created. 

The By Entities report displays the appropriate calculated result in the accounts to which you posted the calculation to.

Once your before reports are available, you can run your consolidation via the Explorer > Fluence > Consolidation > Processes > Models workflow area. You can either Run Consolidation or Run All, and select the appropriate scenario, entity, and time period.