The tax data dilemma: How can companies turn challenge into advantage?

The growing complexity of global tax

Tax compliance has changed fundamentally over the past decade and is now shaped by a tapestry of global policies and a desire for unprecedented transparency.

It means finding complicated data, and lots of it – often from systems and teams that were never designed with global tax reporting in mind.

Freddie says: “When Country-by-Country reporting first came out, there were fewer than 20 data points you needed to report on, whereas for Pillar Two you're having to collect upwards of 100. In the space of a few years, you’ve got five times more data, but you don’t have five times more people. It’s a massive issue for companies.”

For large multinationals, this creates a structural challenge. Tax-relevant data typically sits across countries, in finance, HR and operations, and within local enterprise resource planning systems (ERPs). Even when organisations know where the data is, accessing it in a usable format can be a significant hurdle.

“There’s a real difference between knowing where the data sits and actually being able to extract it, transform it and deliver it in a way that supports compliance,” Freddie explains. “Knowing it exists isn’t enough.”

Siloed systems, shared risk

One of the most persistent issues organisations face is fragmentation. Data is often stored in silos, separated by department, geography or software, with no single view and without clear ownership. “We often see that the bigger the company, the lower the quality of the data, purely due to volume,” explains Kit.

“You can have different teams using different ERPs, different reporting timelines and different interpretations of the same underlying transactions. There are lots of obstacles to overcome before you can pull together a consistent picture.”

This fragmentation has a direct impact on data quality. As organisations grow, so too does the risk of inconsistency, duplication and error. Manual interventions, such as lifting and shifting data between systems, increase the likelihood of mistakes.

Not only does this mean operational inefficiency, it raises the risk of non-compliance, financial penalties, prolonged audits and even reputational damage.

As Freddie says: “If stakeholders see different numbers being reported in different places, it poses questions about governance and trust.”

“And then you're constantly on the back foot trying to catch up, be compliant, keep your investors happy and quiet all the storms, while missing the opportunity to plan ahead for the next deadline,” Kit adds. “It just snowballs.”

AI, automation and the need for guardrails

With so much data required, technology has become an essential aspect of compliance. In some tax and legal functions, AI is already being used to review large volumes of documentation, extract key information and support analysis on a scale that simply wouldn’t be practical with manual processes.

But the conversation is nuanced. Without clear governance and human oversight, even the most sophisticated tools can introduce new problems.

“There are inherent risks with AI,” Freddie says. “Some companies have encouraged teams to use AI for everything, without clear rules in place, while others have been AI-averse. The technology can absolutely help with this data challenge, but guardrails are so important.”

For larger organisations, technology plays a critical role in integrating data across systems, cleansing it, and reducing reliance on manual processes.

Dashboards and visual analytics can also be powerful. By presenting data in a clear, consistent way across jurisdictions, organisations can identify anomalies, understand their effective tax positions and pinpoint areas of risk or opportunity.

In one case, Kit recalls, Deloitte created a dashboard for a company’s global corporation tax compliance, giving the client oversight on its effective tax rate per country for the first time.

“It gave them the whole picture and brought to light some issues – we were able to work with them to bring down their effective tax rate to a more manageable percentage,” he says.

How to prepare for the future

Companies need to adopt efficient and robust ways to analyse data at speed, or risk being caught out just as fast, Kit advises. “It’s inevitable everything is going to be digitised and there will be increased scrutiny, so clients are going to have to be able to share their information in real time.

“Authorities worldwide will begin using AI to analyse data in audits and compliance checks, so if it’s not clean and ready to go, it’s going to get called out fairly easily and fairly quickly.”

The direction of travel is clear. Tax compliance is becoming more digital, more transparent and more interconnected across borders.

Soon, tax authorities around the world will be able to look into your global data, Freddie believes. And this has implications not just for systems, but for skills and organisational models.

“We talk about the idea of a hybrid tax professional,” continues Kit. “Someone who understands tax, but also data, technology and how systems interact. You can’t operate in silos anymore and organisations need to look at upskilling their teams.”

For businesses, the starting point is often gaining a thorough understanding of their current landscape –what data they have, where it sits, who owns it and how it flows through their compliance processes. From there, developing a coherent data and technology strategy will allow them to move away from piecemeal fixes towards a more sustainable model.

Deloitte’s approach focuses on looking holistically at data, processes, people, technology and governance. By drawing on global experience across jurisdictions and tax types, teams can help clients identify where improvements will have the greatest impact.

The goal is to give clients confidence that their data is accurate, their compliance is under control, and they have the insight they need to make informed decisions for an increasingly digitised future.