Simplifying tax technology

01 April, 2021

The modern tax function needs to be progressive and agile. To work at the best of its ability, it needs a defined technology strategy, aligned with key stakeholders in the business. It can then integrate new technology or leverage existing systems with a clear road map for delivery.

The tax function needs to consider making the most of the features and capabilities of existing technologies and Enterprise Resource Planning (ERP) systems. There may also be opportunities for automated data extraction and transformation, as well as advanced analytics and visualisation. These can all accelerate the journey towards an enhanced, digitally-enabled tax function.

A photo of the curving, three-pronged steel and transparent glass footbridge known as the Hyperlink of Google's office buildings over Barrow Street.

What can technology do for tax?

The tax landscape is constantly changing. Global tax authorities are accelerating the pace of change, increasing the volume of compliance requirements and shifting the burden of governance, evidence and review onto the taxpayer.

Changes in technology are partly responsible for this approach. Digitisation allows tax authorities to request, process and interrogate larger volumes of information.

These advances also present an opportunity for tax functions to deliver greater operational efficiencies and better manage risk through technology.

The value of technology

Tax functions are coming to understand the value of leveraging technology. It helps them to drive greater efficiency, improve their processes and manage risk.

While companies largely understand the importance of creating tax technology strategies and pursuing related initiatives, many have not yet made investments in these areas. This transformation and commitment to evolution can play an integral role in transforming tax into a strategic partner within a business. As such, tax leaders need to engage with company leadership and commit to the next steps in the evolution of the tax function.

Data optimisation and process automation

By improving data quality and automating processes, technology can transform your tax function into an enabler of business goals.

Small automation tools, such as Alteryx or simple robotic processes, can reduce the time and cost associated with data intensive processes. This can be achieved without having to wait for other projects to make improvements to existing systems or reports.

Questions to ask include:

  • Are we using too many manual processes?
  • Are there ways that small automation projects could address specific areas?
  • Is there a set of repetitive tasks being performed on a recurring basis that could be automated?

Identify a shortlist of tasks that could yield high returns, that have few barriers for success.

Small automation tools have put the power to solve problems and streamline tasks into the hands of tax professionals. The available tools can drive efficiency and increase control, creating room for more value added activities.

Empowering tax professionals with automation and analytical tools can redefine the way they work to solve their most challenging data-related problems in ways they couldn't before.

The combination of low cost user friendly interfaces and data visualisation tools enables tax professionals to harness data while automating burdensome processes.

These tools can also lead to solutions for proactive monitoring, planning, forecasting and decision automation.

We can work together to upskill your team on integrating these tools into your tax function and create a clear scalable road map for delivery.

Unlocking the potential of your existing ERP systems for tax

Automation can deliver significant benefits within manageable budgets. At the same time, there is a case to be made for a well-designed ERP system, linked to your business areas transactions with a sound tax set-up to enable greater reporting accuracy and efficiency.

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 your master data sources, can help to support a best-in-class safe and efficient tax function.

What we are seeing in more recent ERP transformations, is that organisations are starting to consider tax earlier in the process, during the scoping and budgeting phases. Considering tax earlier can lead to significant benefits for the tax function and the overall end-to-end finance solution. There is an opportunity to look at ways to improve the quality of the data that the systems provide to the tax function – and, in turn, this can help to improve finance processes and efficiencies providing greater data insights.

It is important to note that there does not have to be an ERP system implementation in order to derive significant benefits for the tax function. Whatever the stage of maturity, we can work with you to take the complexity away from enhancing the ERP system for tax.

We can guide you and help you consider how to:

  • Leverage ERP systems for financial data you need to support the production of tax deliverables
  • Spend less time collecting, manipulating and managing data, and more time on strategy and value added activities elsewhere
  • Realise the benefits of tax integration and making the ERP system work for you

Technology is only one part of the solution. It is important to make sure you have the right skills, culture and stakeholder involvement. Technology should make your life easier, not more complicated. That's why we look for solutions to help make tax technology simple.

Five things to consider now

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

1. Where are you now?

It is important to know your current system, understand your processes and associated pain points. Identify where there are inefficiencies and how they are impacting the tax function. It is also important to understand the key internal and external stakeholders/factors impacting transformation.

2. Where do you want to be?

Consider what an optimised tax function might look like for your tax function. Consider what type of technology might support, what are the resource requirements and various stakeholder roles.

3. Quick wins

Identify quick wins by assessing and prioritising 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.

4. Governance

As part of defining and implementing any tax technology transformational strategy or solution, a governance framework is essential. To achieve returns over the long-term, optimised processes need to be supported and monitored. There is an increasing emphasis globally on the management of tax and an appreciation that the majority of tax risks occur outside the tax function. However, the key challenge is ensuring vital controls taking place outside the tax function are performed and evidenced on an ongoing basis.

5. Be agile

Based on PwC's CFO Pulse Survey 2020, 42% of Irish CFOs respondents versus 50% globally are looking to their IT teams and the technological resilience they have shown during COVID-19 to accelerate automation and new ways of working. However, 82% of Irish CEOs surveyed in PwC's CEO Survey 2021 are planning to increase their investment in digital transformation. Taking an agile approach to this work is essential and essential to start now.

We are here to help you

We know that the tax landscape continues to change and the tax obligations you face are increasingly mounting.

By combining our technology expertise with our knowledge of your business needs 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 can work with you to maximise the efficiency of your existing systems and to discover the power of tax data management and analytics to assist in the decision-making process in areas such as detection of risk, opportunity identification, scenario planning, and overall business support.

Now is the time to embrace transformation. We are ready to help you on that journey. Contact us today.

Contact us

Johnny Wickham

Director, PwC Ireland (Republic of)

Tel: +353 1 792 5262

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