Tax Technology: The current scenario

 

Around the world, businesses continue to evolve rapidly. Momentous advancement is being witnessed in the field of technology and its role in the day-to-day operations of businesses. In this scenario, there is an unprecedented potential for emerging technologies that will reshape how work is done, how businesses grow, and how markets and industries evolve. And with dramatic changes in the tax landscape, tax authorities and taxpayers are looking for ever-increasing innovation in tax management. Consequently, there is a great need for organisations to invest proactively in their tax functions in this fast-changing business and regulatory environment.

The main challenges facing tax functions today:

  1. Inconsistency in the information used in various tax filings for diverse tax laws in multiple jurisdictions
  2. Lack of effective control over compliance that needs to be undertaken and confidence that the required data is available for completion of compliance
  3. Optimisation and achievement of efficiency in the tax function to provide quick but accurate tax input with high assurance for effective decision-making in business
  4. Ability to influence shaping of new laws, protocols and public opinion across multiple jurisdictions and diverse regulators, and other stakeholders including media and NGOs

Therefore, companies need to implement the right technology-related strategies to mitigate the challenges mentioned above by correctly analysing:

  1. Technology-related requirements: analysis of cost benefit aspect of technology adoption
  2. Alignment of technology: alignment of technology for tax functions with organisations’ overall technology strategies
  3. Prioritisation of effort: initial technology implementation in high-impact areas on priority basis so that benefits are realised in terms of effort and cost

Why has technology not been widely adopted by tax functions till now?

  1. Dearth of reliable technology-based tools that could help to automate tax functions
  2. Lack of availability of the right skillsets and domain expertise in niche areas of technology
  3. Lack of awareness of benefits accruing from implementation of technology in tax functions

Why should it work now?

  1. The new generation of tax managers are forward-looking and are ready to invest their time and energy to derive the maximum value by using technology in their organisations’ tax functions.
  2. Today, use of high-end robotics and Big Data analytics is not restricted to research projects and is easily available for tax applications.
  3. Boards are aware of the consequences of weakness in their tax functions and are eager to invest in tailor-made technology-based solutions.

 

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