Perspective

Embracing digital tax transformation

From manual to automated tax processes

With tax reporting largely driven by transactional data, many traditional manual tax processes may not meet the data needs of modern Tax departments. This is where the implementation of technology and automation tools will be key in adding value to the business. And with the right information, leaders can draft a road map to guide their digital journey.

Global tax changes, shifting regulatory requirements spark action:

Digital Transformation for corporate Tax functions is anchored in clean, complete, relevant, and timely business data from enterprise resource planning (ERP) systems. Benefits to a Tax function from a properly planned digital transformation cover the spectrum of real-time reporting, improved tax transparency, confidence in the data for planning purposes, efficient compliance, and ultimately, tax reporting, which is an important component of financial reporting. Tax reporting of the future is largely driven by transactional data, so transformation within the ERP also starts further up the chain in critical business processes designed and built for the business, along with tax data needs embedded.

Tax data management in such a rapidly evolving environment

Less art, more science

Tax data management is less art and more science. An evolving Tax function should have all the elements that are necessary to manage tax data required for compliance, reporting, planning, and managing controversy.

It starts with capturing data elements and then creating attribution tags for tax type, jurisdiction, account classification, etc. at the time when business transactions are recorded in an ERP system.

For successful tax data management, the Tax function needs to identify and understand the business drivers that create tax data across the enterprise’s systems landscape.

Common business drivers generating tax data:

New markets and products
New jurisdictions
Changes in supply chain
New regulations
New business models

The Tax function needs to understand these business drivers, and the tax-sensitive challenges they may present. The Tax function should analyze its needs relative to business process changes and determine how to manage such data for the purpose of compliance, reporting, and managing future controversy.

Data management strategies

Applications and tools that work

As tax authorities become more sophisticated, they’re requiring more data, more frequently, from taxpayers, putting additional demands on Tax departments. As a result, many traditional manual tax processes may not meet the data needs of modern Tax departments.

So, what do tax professionals need to help meet the data requirements of modern Tax departments?

Data-wrangling and ERP

Data-wrangling tools can be used to extract and format the data required to comply with multiple jurisdictional rules. ERP solutions in the cloud can integrate tax technologies with other finance and business applications

Data lakes

Data lakes—centralized repositories for structured and unstructured data—assist in increasing convenience and ease for data storage. A recent study by Gartner1 showed that 57% of data and analytics leaders are investing in data warehouses, 46% are using data hubs, and 39% are now using data lakes.

Application programming interface (API)

API is a software interface that allows two applications to interact with each other without any user intervention. In simple terms, API means a software code that can be accessed or executed. Software needs to change over time, and APIs help to anticipate changes.

Taking tax digital

Moving to the cloud

Today’s Tax function—and the Tax function of tomorrow—requires tax professionals to have access to real-time, transaction-level data. And they need to be able to trust its accuracy. This will be no different as clients prepare to respond to the Organisation for Economic Co-operation and Development (OECD) Pillar Two model and need to collect information globally in a very short time frame.

Transitioning to cloud-based applications can enhance risk management through consistent software updates, in order to address future regulations and provide greater visibility into the data, while providing an accessible digital audit trail.

For multinationals with large global footprints and tax exposures, a move to the cloud can allow group-level tax leaders and head-office executives unprecedented insight into the company’s global tax positions, risks, and opportunities.

Develop your digital tax road map

Staying on track

Tax leaders are increasingly turning to technology for answers—and finding new ways to add value to the business. With the right information, leaders can draft a road map to guide their digital journey and lead Tax functions to:

Add more value in line with the CFO’s priorities by engaging across traditional organizational boundaries
Align with organizational goals
Engage with IT, Business, and Finance functions
Understand how to plan the approach—big-picture thinking
Move beyond traditional imperatives of ensuring quality and maintaining control in the management of global tax

Tax leaders and business executives should ensure the concerns of the Tax function are represented when considering their organization-wide data strategy and digital transformation journey. This will be imperative in ensuring the organization is equipped to meet current and future business requirements imposed by both external and internal stakeholders.

From manual to automated tax processes Global tax changes, shifting regulatory requirements spark action

Digital Transformation for corporate Tax functions is anchored in clean, complete, relevant, and timely business data from enterprise resource planning (ERP) systems.

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Embracing digital tax transformation

From manual to automated tax processes