The Significance of Technology in Today's Tax Landscape

As the tax landscape and organisations evolve, businesses must scrutinise their tax department’s operational processes and technology and make the necessary changes to streamline tax processes.

FREMONT, CA: Globalisation and ever-changing regulations pose several challenges for corporate tax departments as most tax departments are time-constrained, making changes to a good enough tax system to keep up with advancements may appear unnecessary. However, there is a need for change in the contemporary tax environment. Businesses must contemplate their existing tax technologies and identify their current positions, future of the company, why and what technologies are deployed. Most corporate tax departments use a variety of technology within different landscapes of systems.

Tax technology lays a strong foundation for tax departments as it helps organisations to be more accurate in collaborating globally and tax systems to be more equipped to face today’s challenges. Moreover, tax technology is time-efficient and enables businesses to shift their focus to more strategic work, providing the opportunity to elevate the tax profile within organisations and establish a sustainable framework for the future. Therefore integrating technological advancements are imperative in the corporate tax departments to alleviate tax complexities and challenges.

Accuracy and Compliance

There are numerous regulations for multinational tax departments to comply with. Due to the increased regulation, multinational corporations are now required to provide accurate information about the global allocation of their income and taxes paid, as well as certain indicators of the location of economic activity, information about which entities do business in a given jurisdiction, and the types of business activities each entity engages in. Multinational corporations are focusing on tax technology as the foundation for a global control system for master files and country-by-country reporting to ensure compliance.

A centralised tax technology platform provides accurate data for audit substantiation and closing activities. By using automated data, businesses can roll from year to year seamlessly, create historical point-in-time data, and run reports easily. The consistency and accuracy of this data provide auditors with a single source of truth, enable quick and accurate provision calculations, and automatically reconcile any last-minute changes to the quarterly close process.

Furthermore, tax technology reduces the need for outsourcing as departments maintain complete internal knowledge and data ownership. Keeping tax activities within organisations is cost-effective and offers the ability to mitigate challenges rapidly and more accurately. It also enhances accuracy and compliance through efficient data management, enabling tax departments to adhere to increasing regulations, improve audit and closing activities, and keep tax activities in-house.

Process Efficiency

Tax technology has evolved from spreadsheets and shared drives to dashboards, single sign-on platforms, cloud-based systems, and ERP migrations. This introduced a plethora of opportunities to streamline and standardise tax processes. As time frames for audit demands and closing activities continue to get shorter, the necessity for this kind of process efficiency becomes increasingly important.

Regardless of any area of tax, there is an emphasis on managing the end-to-end process without duplicating work. Tax technology enables securely gathering and amassing data from various sources and moving it to income tax or tax provision work paper flawlessly. It also provides consolidated and harmonised trial balance data for all tax processes and maintains accuracy even when book numbers keep changing. Additionally, businesses can meet ever-shrinking deadlines with fewer resources with the readily available data to compute accurate tax accruals and produce reports and work papers that substantiate the amounts that were booked.