Keep pace with digital tax compliance for big data and fast reporting
Save time and resources in the ever-changing world of indirect tax reporting
For large companies operating in a digitalised global economy, indirect tax compliance has evolved from an arduous manual task to a largely hands-off process performed by sophisticated tax technologies that execute most tax functions—data gathering, computation, reconciliation, invoicing, reporting, filing, etc.—automatically and in close to real time.
Much of this shift to digital tax compliance has been driven by governments and tax authorities around the world who are adopting e-invoicing, real-time reporting, electronic tax filing, and other digitalised forms of tax compliance, all of which require tax technologies that can keep pace with the massive amounts of data these systems generate and the reporting speeds that digitalised tax regimes require.
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| Saving time and resources with modern tax technology |
| At the centre of digital tax compliance: Clean data |
| Challenges and decisions for company leaders |
| Practical tips and strategies for digital tax compliance |
Saving time and resources with modern tax technology
To help tax professionals adapt to this new era of digital tax compliance, Thomson Reuters recently hosted a webinar discussion with tax specialists from Deloitte, who shared many of the insights and strategies they use to help their clients position themselves for success.
Faraz Hussain, a partner in Deloitte’s tax technology consulting practice, explains that the shift to automated tax processes has not necessarily made the job of corporate tax compliance any easier—it has simply made it possible for companies and tax authorities to share information more efficiently.
“The access and availability of tax information, and the ability to process and assess the volumes of data that is in those electronic filings—it saves time and frees up resources,” Hussain says—resources that can be devoted to other important activities.
Thomson Reuters global specialist director Tracy Davis also notes that modern tax technologies are helping many global companies keep up with the on-and-off nature of changing tariffs and tax rules. When tariffs are enacted, then paused, then changed again, “it can be challenging to get ahead of that,” Davis says, “but with the right technology in place, companies can make those changes very quickly and accurately and remain compliant.”
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At the centre of digital tax compliance: Clean data
To enjoy the many benefits of modern tax technology, however, companies should have the proper systems and processes in place, and those systems need to have access to clean, high-quality data.
An enterprise resource planning (ERP) system coupled with a tax engine that can scale as the company grows is the most common solution to the data challenges faced by global companies. Tools built specifically for such tasks as e-invoicing, tax compliance, and supply-chain visibility can be useful as well, the panellists agree, though they caution that the efficacy of these systems and tools depends largely upon the quality of the data they are processing.
“Garbage in, garbage out” certainly applies to tax data, says Lindsay McAfee, a principal in Deloitte’s indirect tax practice. “Companies that want to improve and enhance their digital tax reporting should look at their data and processes, engage with stakeholders, and make sure they have the technology in place that can support the globalisation of their business,” McAfee says.
Challenges and decisions for company leaders
Companies in need of upgraded technology often face considerable challenges, however.
“Companies of all sizes are dealing with technology constraints,” McAfee explains. “We’ve worked with a fair number of companies who say they want to scale, but they don’t have unlimited time, budgets, or resources. These are real challenges,” she acknowledges. The problem with putting off the technological upgrades a company knows it is going to need in the future is that when the future arrives, McAfee warns, “the data fields needed to comply with global requirements often aren’t there.”
What often happens in such situations, McAfee says, is that the company that started out talking about its limitations ends up making its own business case for technological transformation. From that point, one of the most critical challenges is developing a strategic plan that will allow the organisation to upgrade and adapt its systems while at the same time maintaining the standards of accuracy and efficiency needed for global compliance.
“Whether we’re talking about digital reporting or tax rates and rules, companies should consider using software solutions like Thomson Reuters ONESOURCE to do the heavy lifting globally,” says Tracy Davis, adding that “even with a large tax department or organisation, it’s nearly possible for humans alone to keep up with all that’s going on globally.”
Different technology tools for automating digital tax reporting were also discussed during the webinar, though ONESOURCE was mentioned as the preferred choice for tax automation and compliance because of its comprehensive breadth of options and the experienced team supporting it.
Practical tips and strategies for digital tax compliance
In closing, Hussain and McAfee shared several practical tips for companies and tax professionals facing similar challenges as they embark on their own technological journey:
- Develop a digital transformation strategy: Piecemeal solutions rarely work on such extensive projects. A thorough plan guided by a clear strategy is the best way to ensure success.
- Bring tax into the decision-making process from the beginning: Tax is the largest consumer of data in most companies, so give tax teams a seat at the table.
- Collaborate and communicate with internal teams (IT, finance, legal, HR): Better cross-departmental communication gives companies a better chance at creating a more effective system, smoother processes, cleaner data, and improved compliance.
- Invest in the right technology solutions: Understand the company’s needs and goals to ensure that new tax technologies are a good fit.
- Stay informed and think globally: Tax rules and regulations change quickly, so stay informed through research and/or content provided by a reliable third party.
- Engage with stakeholders: You are not alone, so it’s important to communicate with internal teams, external clients, advisors, tax authorities, professional organisations, and stakeholders to gather information and build trust.
- Get the data piece right: Because getting the data wrong is not an option.
Listen to the complete digital tax reporting webinar to learn more about how new tax technologies can help companies navigate the ever-changing global tax landscape. Link to Pagero OS and IDT?