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Driving efficiency within the tax function - Optimising ERP systems for tax

06 July, 2021

With the increased obligations and market pressures currently facing the tax function, efficiency is no longer an added benefit but rather a requirement. 

In order to maximise the efficiency of the tax function, it is imperative that organisations have a clear strategy to leverage the systems already in place within the organisation and also to identify any gaps to be filled by new technology in getting to where you want to be.

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An opportunity for tax

As part of any digital transformation, organisations are promised enhanced capabilities to enable them to plan for the future. While most businesses will ensure that adequate resources are allocated from a systems implementation perspective, many miss an opportunity to maximise efficiency from a tax perspective.

Tax requirements touch every part of the business. To deal with that reality, organisations have developed systems, policies and procedures to comply with requirements that have built up over the years. 

Organisations are having to continuously consider and accommodate additional requirements based on business growth and changing tax legislation. This needs to be reimagined and revised to make the most of the efficiencies brought about by the new technology to really maximise the value.

What are the tax business requirements of an ERP (Enterprise Resource Planning) system?

From a technology standpoint, three objectives we typically see for tax transformation projects today are:

  • The reduction of risk
  • Increased efficiency
  • Improved quality of work 

A typical finance transformation project presents a significant opportunity to address these objectives. From an indirect tax perspective there is an increasing challenge to satisfy VAT reporting obligations in near-time or real-time. Increasingly we are seeing a desire to enable advanced controls and analytics communicated through dashboards and visualisations facilitating a more streamlined review and analysis process.

An optimal ERP system configuration defined by a complete set of tax codes, a comprehensive set of tax rules to cover all business scenarios and an accurate tax classification of master data sources, can help to support a best-in-class safe and efficient tax function.

With regard to statutory/direct tax reporting, by tax sensitising financial data within the ERP system and utilising a single source of information, the required tax information can be pulled directly from the system. This will reduce the number of offline schedules and information requests required to meet compliance obligations which will, in turn, drive costs / time out of what might currently be an inefficient process.

In considering transfer pricing as part of a transformation project there are opportunities to overcome inconsistent data issues and enable more efficient and effective implementation and monitoring on a real time basis. This will facilitate a better management of risks involved in cross border transactions by providing traceable and auditable solutions with strong process controls as well as better coordination and collaboration among stakeholders.

In focussing on how your ERP system can work for tax the following are a number of relevant considerations:

  • Master data governance
  • Automated tax determination
  • Real-time reporting
  • Periodic compliance
  • Advanced analytics and controls

The challenge from a tax perspective is often how to address these considerations as part of a broader transformation project. To support this objective it is worth considering the role of a tax business integrator. A tax business integrator can help maximise the return on an organization's technology investment to ensure a successful deployment.

A tax business integrator works with the business to help identify how tax operates within the organisation, and works with you to plan and implement a fully integrated business transformation project. There are several benefits to be realised such as, greater process efficiency, more accuracy, better transparency and enhanced data integrity.

The three key actions to take now

It is important to identify where you are now, where you want to be, and what investments need to be made.

Where is the pain?

Understand your current processes and associated pain points - where are the inefficiencies and how are they impacting the tax function? It is important for tax to stay connected to the business and be an active participant in enterprise technology initiatives.

Stakeholder engagement

Consider what type of technology might support, what are the resource requirements and various stakeholder roles. Understand the key internal and external factors impacting transformation and ensure tax have a seat at the table. Plan for a tax business integrator to work with you and your business to plan and implement a fully integrated business transformation project.   

Plan ahead

Assess and prioritise a shortlist of existing technologies that can be leveraged or current processes that might be suitable for automation. It is important to determine what can yield the greatest value with reference to implementation complexity. Consider your current and future resource needs/desires - people and technology - and clearly define your tax technology roadmap to get there.

We are here to help you

As pressure continues to mount on tax functions, we know that doing more with less is a constant challenge for organisations. 

We can help you to design and implement a well defined technology strategy for tax, to enable technology as a strategic partner to the tax function.

We are here to help you maximise the efficiency of your existing systems and processes to assist in increasing efficiency, reducing risk and improving the quality of work for your tax team. Contact us today.

Contact us

Johnny Wickham

Director, PwC Ireland (Republic of)

Tel: +353 1 792 5262

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