Four steps to improve the impact of tech on tax
November 20, 2020
Global tax authorities are accelerating the pace of change, increasing the volume of tax compliance and shifting the burden of governance, evidence and review onto the taxpayer.
Changes in technology are partly responsible for this approach as it allows tax authorities to request, process and interrogate larger volumes of information.
However, these advancements also present an opportunity for tax functions to deliver operational efficiencies and better manage risk and here we look at four steps organisations can take to help unlock those opportunities.
1.Take a phased approach
An end-to-end transformation, deploying the latest technology to deliver the tax function of the future in one big hit, sounds attractive. But in reality, there are a number of barriers to this and organisations typically take a phased approach. Develop a holistic view of your organisation's current systems, identify the key issues and establish a plan to deliver over a three-to-five year timeframe. This will help avoid ending up with something that resembles a patchwork.
2. Integrate tax governance
There is an increasing emphasis globally on the management of tax and an appreciation that the majority of tax risks occur outside the tax function. However, the key challenge is ensuring vital controls taking place outside the tax function are performed and evidenced on an ongoing basis.
At PwC, we have been working with clients to develop their tax governance for years and in response have developed, Smart Tax Suite. Smart Tax Suite is a next generation workflow, data collection and risk management solution which enables:
- The management and tracking of key workflows (such as corporation tax, operational taxes and VAT)
- Data gathering, for instance total tax contribution data or management attestations
- Integrated operational risk management
This approach allows businesses to provide a clear structure for tax reporting and compliance as well as integrating and evidencing effective governance in a cost-effective way.
3. Get a better understanding of your business
Data visualisation tools, such as Power BI and Tableau, are becoming increasingly cost effective and relevant to your tax obligations. Working with finance to upload granular data and develop clear visualisations can simplify time intensive processes and give you greater insight. Some good use cases include business travel, country by country reporting and employee benefits and expenses.
4. Small automation can solve big problems
A significant amount of tax time is commonly spent on restructuring and analysing bad data. As well as increasing cost, this increases the risk of manual error.
Small automation tools (such as Alteryx or simple robotic processes) can reduce the time and cost associated with data intensive processes without having to wait for wider projects to make improvements to existing systems or reports. For example, we are currently using these tools to support clients with demonstrating digital links to source data in advance of the next phase of Making Tax Digital being introduced in 2021.
Evolution can still be revolutionary
While a tax function may aspire to complete transformation, the reality, more often than not, sees incremental change supported by technology. Where technology adoption is accelerated, the tax function gains tangible benefits from the efficiencies and insights it contributes to the business.
Smart Tax Suite, small automation and data analytics tools are just some of the options upon which to iteratively build up technology within the tax function.