The new Thomson Reuters podcast, Tax & Tech Talks explores the evolving intersection of tax and technology. Each episode explores current issues or topics, giving listeners an opportunity to gain a deeper understanding and new perspectives in tax and tech. We chat with top subject matter experts and industry leaders as we break down these top-of-mind topics.
In this episode ‘It’s Complicated – It’s Really Complicated: How Technology Can Help Tax Departments Deal with Constantly Changing Tax Codes,‘ the Thomson Reuters ONESOURCE team discusses the number one challenge for tax departments– keeping up with changing regulations. Host Bianca Kuijper, Direct Tax and Transfer Pricing Director at Thomson Reuters, and Kim Majure, partner at KMPG’s National Tax Practice based in Washington D.C., discuss the new EU mandatory cross–border disclosure reporting requirements known as DAC6 and how technology has changed the tax landscape forever.
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It’s Complicated– It’s Really Complicated: How Technology Can Help Tax Departments Deal with Constantly Changing Tax Codes
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Kim is a tax attorney whose career has spanned decades, and she has a wealth of knowledge and serves as an inspiration for anyone feeling overwhelmed with changes in the tax rules and regulations. She has spent time in both law and accounting firms, starting out focused on arbitrage until the anti-tax shelter rules flipped her planning career into controversy. She began defending transactions and people during audits and describes her experience as “oddly relevant” to address the challenges of the new rules contained in DAC6.
In this episode, we learn that change is the only constant in tax and how technology can help tax professionals keep up with the changing regulations. Kim admits she was resistant to technology early in her career, but she learned to embrace change and shares how technology has been critical to her success over the years.
How Technology Has Changed Tax Audits
Kim shares knowledge and insight on how technology has changed both the government and taxpayer side of the audit and explains why technology is needed to manage all the details. She describes that technology on the government side has helped break down the silos allowing access to information earlier in the audit process.
On the taxpayer side, technology has helped taxpayers manage governments’ new approaches and forced them to get coordinated. Tax rules have evolved to the point that not only are governments talking, but internal stakeholders within the same companies are talking as well.
This reporting and coordination could be done manually but as transactions touch and concern more people within the organization, there is a trickle-down effect of documentation required. Technology is vital to consistently track and accurately maintain all of the relevant details because otherwise, you never know when something can slip through the cracks.
DAC 6 – What it Is and Who Needs to Comply
It can be overwhelming to keep up with new regulations and can seem appropriate to let overseas colleagues handle items like DAC 6, as it is the European interpretation of the BEPS Action 12, but Kim explains why “this one is going to take a village.”
Aimed at providing more transparency the taxpayer is required to provide “just in time” reporting with respect to arrangements of interest, not just transactions, but proposals of transactions and transactions that were started and stopped. Additionally, all the participants, including the advisers are potentially liable for reporting and there are stiff penalties for misreporting.
Kim explains why this means you can’t just let your European operations or advisors deal with it and why this reporting is best driven at the headquarters level. She provides specific examples of how complex things can get in the way, and why it needs to be looked at from a headquarters risk perspective.
Technology Saved Her Practice
Finally, Kim shares that she came to technology very reluctantly and she was in denial for a long time. She explains the way she grew up it was very focused on memorizing revenue rulings and it was hard but now it’s just “crazy”. She explains how complex it can be by walking through how many forms and documents that are required now for a simple cross-border deduction and why she had to admit she couldn’t do it all alone. She explains that it’s just too overwhelming these days and there needs to be technology involved, especially when it comes to modeling. She admits technology probably saved her practice and shows us all the power of embracing change through her example.