Innovation strategies to meet the challenges of indirect tax
People who purchase software rarely get to talk to the product’s developers about the development process or the features and updates users can expect in future iterations of the product. But that’s precisely what happens at the Thomson Reuters annual Synergy conference, where product developers, software engineers, and other representatives from the company gather with users to share knowledge, discuss industry trends, listen to feedback, and peer into the future.
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At the Synergy event, two representatives from the Thomson Reuters indirect tax team—Chris Reich, Lead of Product Management Organisation and Emery Chalar, Vice President of Technology and Indirect Tax—held a session to discuss the current state and future of Thomson Reuters ONESOURCE Indirect Tax (IDT) compliance software, which is used to automate GST/VAT tax determination and compliance both domestically and internationally.
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The forces shaping indirect tax
Sessions like these aren’t just overviews of the logic behind software development. They are also opportunities to hear experts at the forefront of tax technology discuss the trends and challenges that tax professionals can expect to encounter very shortly.
For example, Chris Reich kicked off the session by asking: “What are the forces shaping indirect tax?” Answering his own question, he mentioned product taxability, regulatory compliance, and e-invoicing, but he also pointed out that political unrest around the world has become an important driving force behind changes in tax.
“Governments are looking at indirect tax as an opportunity to raise revenue because it’s a much more palatable path to revenue than increasing income taxes,” Reich said, “But what does that mean to you? It means change,” he said, “it means a lot more complexity in all of our worlds, and we want to make sure we’re ahead of that complexity so that you can deliver consistently every day.”
E-invoicing and real-time reporting
In 2023, for example, Thomson Reuters and Pagero announced a partnership to create an end-to-end compliance solution for e-invoicing and real-time reporting, which dozens of countries will be adopting in the next few years.
“The adoption of real-time e-invoicing and real-time reporting is here,” Reich declared. “It’s growing. It’s coming. I think it’s going to be in the United States before we know it,” he added, emphasizing the need for companies to be prepared for the changes involved.
Tax automation for transaction data
Emery Chalar discussed the fact that in many industries, particularly retail, the only way to keep up with the pace of regulatory changes, growing transaction volumes, and increasing demand for real-time reporting is through the intelligent use of automation.
Chalar noted that in 2023, Thomson Reuters ONESOURCE IDT users processed 10 billion transactions, and in the next year or two “that number is expected to rise to 15-20 billion.” Even more remarkable, he said, these transaction volumes were accomplished “without a minute of downtime,” even during surges when customers were making purchases at a rate of more than 2,000 transactions per second.
Improved content support
Transforming ONESOURCE IDT into a primarily cloud-based system has helped achieve these levels of performance, Chalar explained, but so have advancements in user interface (UI) design and the growing number of application programming interfaces (APIs) used to facilitate communication between programs and speed automation.
The word “automation” encompasses many things, not just tax calculations and transaction speeds. Indeed, one underrated but essential aspect of automation is the content—the rules and regulations that govern domestic and international taxation—that is incorporated into IDT tax calculations.
Processing 20 billion transactions a year is great, “but if you don’t have the rules and regulations you need, who cares?” Reich demurred. This is why their team added 60,000 new retail records in the United States last year, 19,000 updates in the oil and gas sector, and almost two million updates to Latin American content—all of which will be continuously updated in the future.
Innovation plans for 2024
During their session, Reich and Chalar also discussed planned improvements for 2024, such as faster tax determination performance, smoother ERP integration, and more intuitive design elements. But Topic Number. 1 was generative AI and how it might be integrated into future tax products.
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“We’ve been in the AI space with our legal products and some of our corporate products for some time now,” Reich explained—but when it comes to adding AI features in other products, “we want to make sure we pick our battles when it comes to AI,” he said.
In the short term, for example, generative AI is being used to enhance product classification challenges in global trade, Reich said, adding that further AI innovation will be targeted at “the most important problems and customer-support opportunities.”
Closing out the session, Reich and Chalar emphasised that a commitment to improving the user experience informs all product-development decisions at Thomson Reuters. “ We want to make sure we keep delivering on our core strengths and innovating,” Reich insisted—“We want to give you back time in your day.”
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ONESOURCE Determination and ONESOURCE Indirect Tax software simplify research, determination, and compliance – all in one platform.
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