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Data Management

Tax Data Software: Four Ways to Future-Proof Your Tax Department

· 7 minute read

· 7 minute read

Business leaders are looking for opportunities in disruptions as they prepare their companies for the future, and tax technology should be a part of their plans. With the right tax data software, your tax department can save money by automating and standardizing processes across the organization and enhancing accuracy and timeliness. You can liberate your tax professionals for more strategic work that adds value to the business. When you manage tax strategically, you have access to the information you need to make financial decisions from a position of strength, and you can elevate the tax department to the role of a trusted business partner for the business.

The disruptions of 2020 — a pandemic, related regulatory changes, a remote workforce — have changed the business and tax landscape. The Thomson Reuters 2020 Corporate Tax Departments Survey of corporate tax professionals indicates that priorities are currently influenced by the shrinking availability of both internal and external resources, the increasing pressures to comply with continually changing tax code, and the lack of technology that help tax teams be more productive. Now is an opportune time to assess your tax departmental needs for the future and build your value case for tax technology.

Here are four ways to get started: 

1. Decide whether to buy or build your tax data software

Your decision-making team should include global users of the tax data software as well as any business stakeholders who would like to harness your tax data. For example, finance, global trade, and compliance functions all benefit from having easier access to accurate tax data and better reporting capabilities. Similarly, senior business leaders profit from improved, real-time reporting and analytics.

Once your team is in place, it’s time to investigate buying vs. building. To make the business case for either investment, you and the other decision-makers will need to evaluate cost, capabilities, users, scope of deployment, security, maintenance, and upgrade obligations, and time to value, among other variables.

Building tax technology by extending your ERP system with customized processes is a common approach. Unfortunately, it can require significant up-front investment and result in entrenched business silos and long delays. It can also create a lack of agility over time, or in extreme cases, cause systemic process failures. On the other hand, buying a proven tax data software solution from an experienced technology partner can circumvent these problems while also saving money. You can integrate tax data software with an ERP system and you gain control over your tax planning and obligations with up-to-date and accurate data.

2. Use business disruption to build your case

Savvy business leaders see opportunities in disruption that include integrating new businesses; expanding to new regions; moving to the cloud, and implementing, extending, or replacing an ERP system. To make the most of this disruptive business environment, demonstrate the value to be gained with tax data software that:

    • Scales with growth across technologies and tax jurisdictions
    • Incorporates and responds accurately and quickly to regulatory change
    • Gives you visibility with analytics and reporting and has built-in audit trails
    • Helps ensure business continuity with a cloud-based platform

Include any global considerations. With the rise of online stores and sales, accurately taxing digital goods is key for jurisdictions starved for revenue. In the United Kingdom, HM Revenue and Customs have launched the Making Tax Digital (MTD) initiative to make tax administration more effective, efficient, and accurate. To comply, businesses must “use digital record-keeping tools, and their tax returns must be submitted directly from those digital records using MTD-compatible software,” according to a program overview. The service is already being used by 1.4 million businesses — and millions more will join in the future.

Digital tax processes like MTD will increasingly be mandated by suppliers and governments around the world. Now is the time to prepare and move ahead with tax data software.

3. Find the best tax technology solution for your case

Your team has been given the green light to buy tax technology, but which solution should you choose? There are many options on the market, from holistic platforms to specialist solutions. Here are some key considerations to help you get the right solution for your organization:

    • Global coverage. If you run a global business, you’ll want to implement a global platform. You’ll want coverage for all tax types in all the jurisdictions you operate in, to streamline compliance, identify and capitalize on incentives, and avoid penalties.
    • Scalability and flexibility. Your tax platform should be cloud-based and scale with business growth. It should be easily configurable, enabling you to integrate seamlessly with one or multiple ERP systems and other solutions.
    • You work with multiple departments and report to senior stakeholders. You’ll want access to collaboration, research, and workflow on a single hosted platform, to increase visibility and reduce risk. Empower your tax professionals with tools that use artificial intelligence for fast information retrieval.
    • Tax regulations are constantly changing and challenging your responsiveness. Use a digital platform to align tax operations across departments, providing users with access to accurate, real-time information. Eliminate repetitive manual processes so that your tax professionals can focus on higher-level tasks.
    • Digital governance. Keep pace with the latest regulatory changes to ensure that your tax is accurately forecast and spend is right the first time. Provide tax data and reporting that supports internal auditing and meets the rigors of tax authority scrutiny.

4. Develop your tax data strategy

When developing your tax data strategy, identify your desired future state, key stakeholders, data sources, and processes for gathering, standardizing, and cleaning your data. For example, it’s common for tax departments to source data from multiple systems and functions that are not integrated. This disparate data is often out of date and can increase delays and introduce errors into key processes.

A critical next step is to build a data lake to aggregate and transform the data. Then, create a single, centralized repository to make your tax data more accessible and usable to business functions. To eliminate low-level data requests and increase responsiveness, you can provide self-service to your tax department and key business functions.

By developing a single repository of tax data, you can enrich your data over time, increasing its usability and preparing it for analytics. You’ll be able to develop and syndicate reports that provide the business with up-to-date tax metrics and answers to questions before they’re even asked.

Future-proof your tax department with tax data software

The impact of 2020 has shown us not only how swiftly change can occur, but also how new business and customer demands become entrenched, speeding up business processes to serve these demands. The ongoing turmoil created by the pandemic is providing a real-life business case for adopting tax technology now – and manual processes are increasingly out of step with digital business and regulatory change.

While some tax departments are moving ahead with tax data software, many tax departments are still taking a “watch and wait” attitude. But this attitude has consequences: some 38% of tax departments say they expect to emerge from the pandemic weaker, not stronger. Those tax departments that do adopt tax data software this year have an opportunity to move ahead of their peers. They’ll differentiate their services and deliver exceptional results that create significant business momentum. Will you be one of them?

 

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