TAXMANAGEMENT

Versionupdatedon05/29/2016

Process:TaxManagement

Location:Santiago,Chile

Entitiescovered:ArystaLifeScienceChile

Preparedby:JavieraLanda,RASSeniorConsultant 05/29/2016

Reviewedby:NicolasFalquez,RASSupervisorandChaseGrainger,RSMUS 07/05/2016and07/15/2016

ReviewedbyBusiness:AndrsValladares 05/29/2016

Personnelinterviewed:
AndrsValladares,AssistantManagerofAccounting
LuisZuiga,AccountingAnalyst
Area:AccountingArea
Process:TaxManagement(QuarterlyTaxProvision,VAT,TaxReturn,TaxReconciliation)

Start A

Paythetax(if
Closeaccounting
SAP applicable)
period,atmonth
end

TreasuryArea
AccountingAnalyst
N1
N1
R2
TAX.2

Preparetaxaccount
Issuethebalance reconciliations
sheetandinputinto IncomeTax
IncomeTax Spreadshet
AccountingAnalyst

Spreadsheet Calculation
N1
Calculation
AssistantManager
ofAccounting
N1 Preparethetax
return
documentation

Performincometax KPMG
provisioncalculation
N1
KPMG/Assistant

ManagerofAccounting R3
TAX.3
N1
Review,onannual
R1
TAX.1 basis,thetaxreturn
documentation
IncomeTaxProvision
Reviewincometax
Spreadshet AssistantManager
provisioncalculation
Calculation ofAccounting

AssistantManager N1
ofAccounting
N1 R1
TAX.4

Reconcileallincome
taxaccounts
Createtherequest
AssistantManager
payment(if
ofAccounting
necessary)
N1

AccountingAnalyst
N1
End

A
Area:TaxArea,LogisticsArea
Process:TaxManagement(TaxReconciliation,VAT)

Start A

Tax.2

R2

SAP
Invoiceposting PaymentofForm29 SII

Treasury,Credit&
AccountingAnalyst
CollectionChief
N2 N2

Purchaseand
SalesLedger SAP Recordthepayment SAP
ofform29
N2

AccountingAnalyst
N2

VAT
Calculation
SAP
End
N2

TAX.2

R2

Form29
SII
AccountingAnalyst
N2

A
Processes:TaxManagement
Location:Santiago,Chile

Overview
Chileantaxes,asforthisSOXdocumentation,hasbeenbrokenupintotwomainprocesses:IncometaxesprocessandVATprocess.
TheChileancontext,foreachoftheseprocesses,isdetailedbelow:
ChileanTaxesProcesses
Income taxes process:The main Chilean income taxes are the firstcategory tax, which taxes profit(income minus expenses)from
capital(realproperty,securities,andincomefrombusiness)FCTtaxes.Asforitslocalusage,thesetaxesarebeingcalledFCTinour
SOXdocumentationprocess.TheFCTaremanuallycalculatedbytheexternalconsultant.Theexternalconsultantalsopreparesthe
Form22whichisanannualdeclarationthatwillallowyoutorecoverpartorallthemoneythatyouhavebeenpayingastaxesforthe
subsequentyear.Thisprocesscanbedonecompletelyonline(completingtheF22form).Therefundwillbedirectlydepositedintoa
bankaccounttwotothreemonthsaftertheformiscompleted,aslongastheAnnualIncomeDeclarationisaccepted.
VATprocess:InChile,mosttransactionsareaffectedwithVAT.AsaresulttheaccountingdepartmenthastocompleteaForm29
everymonthwhichcorrespondstostatementsonamonthlybasis.ForlegalreasonstheseformsmustberetainedbyTreasury.The
ValueAddedTax(VAT)andtheProvisionalMonthlyPayment(PPM),aretaxesonannualnetsales(excludingVAT).Theformsareused
toraiseaprovisionregardingincometaxespayableintherespectivetaxyear.
Arystahastwodifferentwaystoregistertheirtaxes:
Automatically:accordingtothetransactionpreviouslydefinedintheoriginaltransaction(apurchaseinvoiceorasalesinvoice).
Manually,forTheFTCtheincometaxescalculationandprovision.

Notes
N1IncomeTax
Aftertheaccountingclose(SeeGAMProcessSOXDocumentation),theAccountingAnalystissuesabalancesheetandproceedstosend
ittotheexternaltaxconsultant.
TheFTCtaxesarecalculatedbyanexternaltaxconsultant,butmonthly,theincometaxprovisioncalculationispreparedbythe
AssistantManagerofAccounting.Annually,thetaxprovisioncalculationisprovidedtoathirdparty(KPMG)forvalidation.Theresults
oftheworkperformedbythethirdparty,includingthereviewofanyassumptionsmadeandthefinaloutcome,arereviewedbythe
AssistantManagerofAccounting.Afterthecalculationiscompleted,theAssistantManagerofAccountingrecordsthebalancesinto
theincometaxaccounts(aclosingperiodroutine).Thecalculationandthereconciliationoftheincometaxareformallyreviewed
duringtheincometaxreconciliation.Asaresultofthecalculationthecompanymustdecidewhetherornottopaytheincometax.If
thepaymentisneeded,theTreasuryareaperformsthetaxpaymentintheInternalRevenueService(SII)platform.
Monthly,afterclose,taxaccountbalancesarereconciledandreviewedbytheAssistantManagerofAccounting.TheAccounting
AnalystpreparesForm29whichisreviewedandapprovedbytheAssistantManagerofAccounting.TheTreasury,Creditand
Collectionsproceedstopaythetaxwiththebankkey.Monthly,aftertheautomaticVATtaxescalculation,thereconciliationsare
performedbetweentheVATreport(Form29)andthepurchaseandsalesledger.Thesupportingdocumentationforthetax
reconciliationisreviewedbyAccountingAnalyst.Thereviewofthemaintaxtables,whicharethebasisforcalculatingtheVATtaxeson
theSAPsystem,isperformedannually.Inconsistencies,whenidentifiedandvalidated,arecorrectedinthesystem.Accounting
informationisreconciledwithsupportingdocumentationfortheaccuracyoftheinformation.

Annually,Arystashoulddeliverataxreturn(Form22)totaxauthorities.Alltaxcalculationsduringtheyearendperiodarereviewedby
athirdparty(taxconsultant)beforethefillinganddeliveryoftheincometaxreturn.Thetaxreturnisthenfiled.Theprovisionforthe
returnandthereconciliation/trueup,whichispreparedbytheKPMGexternaltaxconsultant,isreviewedbytheAssistantManagerof
Accountingforcompletenessandaccuracypriortothefilingoftheyearendingfinancialstatementsfortheapplicableyear(TAX.4).
Processes:TaxManagement
Location:Santiago,Chile

Notes(Continued)
N2VAT
TheVATtaxesarecalculatedfromtheparameterspreviouslyregisteredintotheSAPSystem,asfollows:
Duringthecreationoftheoriginaltransaction,theusershouldinputtherespectivedocumenttype(i.e.,purchaseinvoice,sales
invoice,etc.)intothesystem.Basedonthisinformation,thesystemperformsthetaxcalculation.
Attheendofeachentryorexittransactioninthesystem,thetaxcalculationiscompletedandregisteredintotheSAPSystem.After
theautomaticVATtaxescalculation,thereconciliationsareperformedbetweentheVATreport(Form29),andthepurchaseandsales
ledger.
TheAccountingAnalystensuresallthetaxesregisteredintothePurchasesandSalesledgerareregisteredinfiscaldebtsorfiscal
credits.Ifthereareanydifferences,adjustmentsaremade.Inconsistencies,whentheyareidentifiedandvalidated,arecorrectedin
thesystem.Thesystemautomaticallyfeedsfromrecordsofpurchaseinvoices(taxcredit)andsales(VATdebit).Thesystem
automaticallycalculatestheamountofthetotalbillthatcorrespondstoVAT,andsimultaneouslyregisterstheVATintheSalesledger
andPurchaseledgerandcorrespondingdebitaccounts.TheVATtaxcreditcorrespondsto19%ofthetotaltaxamount.
Onthesecondweekofthemonth,theaccountinganalystpreparesform29whichiscompletedwiththevaluesfrompurchaseledger
andsalesledger.
Atthemonthendclosing,Form29isprintedandstored.TheAssistantManagerofAccountingreviewsandapprovesForm29after
theAccountingAnalystpreparesForm29.Duringthethirdweekofthemonth,thisfileisloadedontothewebsiteoftheInternal
RevenueService(SII).Treasury,CreditandCollectionproceedtopaythetaxwiththebankkey(SeeTreasuryManagementSOX).The
AccountingAnalystthenproceedstorecordthepaidtaxinaccounting.
ThegreatestamountofVATCreditisfromimports.WhenArystagetstheinvoicefromtheCustomsAgency,thatcomeswithallcustom
clearances(DI)ofthecurrentmonth,theyproceedtoaccountforthesetaxes,whichcanbeusedinthesamemonththattheyarepaid
in.
Attheendofthemonth,onceinvoicesarepostedandsalesareclosed,thesalesledgerandpurchasesledgerareissued.Whenthe
VATisdeclaredtheAccountingAssistantManagersendsittotheSIIandtheArystaledgers.
Processes:TaxManagement
Location:Santiago,Chile

Risks
R1Theincometaxprovisionisnotproperlyprepared,documentedanddisclosed
R2InaccurateVATdeclarations.
R3Inaccuratefederal,stateandforeignincometaxreturns.
Controls
Keycontrols

TAX.1Monthly,theincometaxprovisioncalculationispreparedbytheAssistantManagerofAccounting.Annually,thetaxprovision
calculationisprovidedtoathirdparty(KPMG)forvalidation.Theresultsoftheworkperformedbythethirdparty,includingthereview
ofanyassumptionsmadeandthefinaloutcome,arereviewedbytheAssistantManagerofAccounting.
TAX.2AssistantManagerofAccountingreviewsandapprovesForm29afterAccountingAnalystpreparedit.AndthenTreasury,Credit
andCollectionproceedstopayit.Monthly,aftertheautomaticVATtaxcalculation,thereconciliationsbetweentheVATreport(Form
29)andpurchaseandsalesledgerareperformedbyaccounting.Thesupportingdocumentationforthetaxreconciliationisreviewedby
the Accounting Analyst. The review of the main tax tables, which are the basis for calculating the VAT taxes on the SAP system, is
performedannually.Inconsistencies,whenidentifiedandvalidated,arecorrectedintothesystem.
TAX.3Annually,thetaxprovisioncalculationisprovidedtoathirdparty(KPMG)forvalidation.Theresultsoftheworkperformedby
the third party, including the review of any assumptions made and the final outcome, are reviewed by the Assistant Manager of
Accounting.
TAX.4Annually,thetaxreturnisfiled,theprovisionforthereturnandreconciliation/trueupispreparedbytheKPMGexternaltax
consultant,andisreviewedbytheAssistantManagerofAccountingforcompletenessandaccuracypriortothefilingoftheyearending
financialstatementsfortheapplicableyear.

GAPS

None.
ProcessImprovements
None.

KeyApplicationsandPrograms(Application/ProgramDescription):
SAPsystem

SpreadsheetsandDatabases(SpreadsheetDescription/SpreadsheetUser):
IncomeTaxspreadsheetcalculation,IncomeTaxProvisionspreadsheetcalculation.

Reports(ReportDescription/ReportUser):
None.

ProbingQuestions:
Q:Howdoesitensurethatalltaxesareproperlyregistered?
A:Apartfromperformingamaintabletaxreviewannually,Theaccountingareacheckedtoensurethatalltaxesareproperlyregistered
intothesystem.

TitleofProcess:
TaxManagement
Control#/ControlType(Automated/Manual/IT):
ManualControls:TAX.1TAX.2TAX.3TAX.4TAX.5
AutomatedControls:None
Control#/NatureofProcedures(Inquiry/Inspection/Observation/Performance):
AllcontrolswereanalyzedthroughInquiryandInspection.

AccountsAffected:
IncometaxesprovisionsandVATaccounts
PersonnelInterviewed:
AndrsValladares,AssistantManagerofAccounting&IT.
LuisZuiga,AccountingAnayst
DatePerformed:
05/29/2016
PerformedBy:
JavieraLanda,RASSeniorConsultant
ShapeDefinitions
C Key Control

C Non Key Control

R
Risk

G Gap

A On Page Connector

N Note

Start/End Start/ End of Process

Manual Action within a System

Manual Action

Physical Document

System Action

Database/ System

Decision

2 Off Page Connector