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KPMG Legal Entity Forecast Modeling

Enabling visibility into legal entity forecasts required for effective tax planning

KPMG Legal Entity Forecast Modeling
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Most companies’ tax departments require forecasts at the legal entity level for a variety of critical purposes. These could range from strategic value chain planning to tax provisions to effective tax rate forecasting to valuation.

This need is particularly enhanced by the One Big Beautiful Bill Act (OB3), and associated impacts to current and potential future state scenarios arising from changes to Foreign Derived Deduction Eligible Income (FDDEI) opportunities, Base Erosion Anti-Abuse Tax (BEAT) payments, and other drivers.

However, there is often misalignment between the level of forecast detail required at the legal entity level, and the level of detail forecasted by companies’ financial planning & analysis (FP&A) departments.

Legal Entity Forecasting (LEF) modeling from KPMG is designed to address these challenges by providing a comprehensive and reliable approach to forecasting at the legal entity level.

Dive into our thinking:

KPMG Legal Entity Forecast Modeling (LEF)

Enabling visibility into legal entity forecasts required for effective tax planning

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The KPMG approach

Our approach to legal entity forecasting involves three key components:

1

FP&A outlook: Utilizing the FP&A outlook as a starting point ‘one source of truth’.

2

Transfer pricing and intercompany flows: Overlaying intercompany trade relationships, value chain flows, and transfer pricing policies to the FP&A outlook.

3

Reliable legal entity forecasts: Deriving a reliable view of the outlook by legal entity and function, which reconciles to the FP&A view, transfer pricing policy, and intercompany trade flows.

Benefits

01
Enhanced visibility

Providing a clear and reliable view of legal entity forecasts required for effective tax planning.

02
Strategic decision-making

Enabling CFOs and tax leaders to efficiently and flexibly assess multiple scenarios around changes to transfer pricing, value chain, and structures, to drive informed decisions that transform legal entity complexity into strategic clarity.

03
Visibility into the broad impact of OB3

Integrating with the KPMG International Tax Reform Analyzer (ITRA) to assess the impact of new and legacy US international tax rules on current and potential future business scenarios (e.g., FDDEI, Section 163(j) limitations, Foreign Tax Credit optimization, etc).

04
Integration with broader KPMG Digital Gateway Suite

Aligning with other KPMG Digital Gateway offerings to more accurately calculate forecasted baseline and scenario tax rates, as well as other tax implications.

Applications

KPMG LEF modeling is particularly valuable for organizations across various sectors, addressing needs such as:

  • Provisions
  • OB3 calculations
  • Value chain management
  • Buy-side M&A
  • Divestitures, carve-outs, and spins
  • Valuations
  • Effective tax rate
  • Restructuring
  • Debt capacity planning
  • Other tax purposes

KPMG Digital Gateway modeling solutions

The integrated and customizable modeling tools of KPMG Digital Gateway help tax leaders prepare for the impacts of the tax policy trifecta head-on—comprehensively and strategically.

KPMG International Tax Reform Analyzer
KPMG BEPS 2.0 Automation Technology (KBAT)
Previously Taxed Earnings and Profits (PTEP) Analyzer
Section 987 Model
Corporate Alternative Minimum Tax Model

KPMG International Tax Reform Analyzer (ITRA)

This tool calculates the cash tax and effective tax rate impacts of US international tax rules, supporting tax provision, compliance, and planning through scenario planning.

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KPMG BEPS 2.0 Automation Technology (KBAT)

Offering detailed modeling of BEPS 2.0 Pillar Two provisions, KBAT provides transparent computations and comprehensive reporting for compliance and planning.

Download PDF

Previously Taxed Earnings and Profits (PTEP) Analyzer

This tool assesses the impact of distributions, considering multiple PTEP baskets and foreign tax credits, aiding in tax provision and planning.

Section 987 Model

This model evaluates unrecognized gains and losses, running scenarios to determine tax impacts and track attributes like suspended losses.

Learn more >

Corporate Alternative Minimum Tax (CAMT) Model

It calculates CAMT scope and liability, tracking specific tax attributes and preparing compliance forms.

KPMG International Tax Reform Analyzer

KPMG International Tax Reform Analyzer (ITRA)

This tool calculates the cash tax and effective tax rate impacts of US international tax rules, supporting tax provision, compliance, and planning through scenario planning.

Download PDF

KPMG BEPS 2.0 Automation Technology (KBAT)

KPMG BEPS 2.0 Automation Technology (KBAT)

Offering detailed modeling of BEPS 2.0 Pillar Two provisions, KBAT provides transparent computations and comprehensive reporting for compliance and planning.

Download PDF

Previously Taxed Earnings and Profits (PTEP) Analyzer

Previously Taxed Earnings and Profits (PTEP) Analyzer

This tool assesses the impact of distributions, considering multiple PTEP baskets and foreign tax credits, aiding in tax provision and planning.

Section 987 Model

Section 987 Model

This model evaluates unrecognized gains and losses, running scenarios to determine tax impacts and track attributes like suspended losses.

Learn more >

Corporate Alternative Minimum Tax Model

Corporate Alternative Minimum Tax (CAMT) Model

It calculates CAMT scope and liability, tracking specific tax attributes and preparing compliance forms.

Why KPMG?

Our modeling tool offers a sophisticated solution to the complex challenges traditionally associated with legal entity forecasting, providing clients with the strategic clarity needed to navigate today's dynamic business environment. By aligning FP&A outlook with transfer pricing and intercompany flows, KPMG helps organizations achieve reliable legal entity forecasts that drive effective tax planning and strategic decision-making.

Meet our team

Image of Robert E Petry
Robert E Petry
Managing Director, Tax - EVS Business Modeling Services, KPMG US
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Image of Matthew Jones
Matthew Jones
Principal, Valuation & Business Modeling Services, KPMG US
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Image of Tom Joss
Tom Joss
Partner, International Tax, KPMG US
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Image of Thomas D. Horton
Thomas D. Horton
Partner, International Tax, KPMG US
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Image of Robert E Petry
Robert E Petry
Managing Director, Tax - EVS Business Modeling Services, KPMG US
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Image of Matthew Jones
Matthew Jones
Principal, Valuation & Business Modeling Services, KPMG US
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Image of Tom Joss
Tom Joss
Partner, International Tax, KPMG US
Read bio
Image of Thomas D. Horton
Thomas D. Horton
Partner, International Tax, KPMG US
Read bio

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Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. KPMG LLP does not provide legal services.

The information contained herein is not intended to be “written advice concerning one or more Federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

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