The current global tax environment is in a state of constant flux. In the United States, the 2017 Tax Reform Bill has instituted the most sweeping changes to corporate taxes the country has seen in over 30 years, prompting corporations to rethink their current strategies and consider restructuring in order to take advantage of lower corporate tax rates. Elsewhere in the world, governments are legislating change on a massive scale. The U.K.’s planned departure from the E.U. and changes that broaden the tax base in countries like Spain, the Netherlands, Belgium and Hungary will all impact how companies operate around the world.
Increasingly, corporate tax departments are looking to technology to help manage the challenges of regulatory complexity and global taxes. Many corporate tax departments use a series of cobbled-together tools, often limited by non-compatible legacy systems they’ve been forced to adopt as a result of various acquisitions. Data and functionality end up in silos, keeping some sectors of the corporation in the dark, without the ability to truly collaborate across platforms.
Rarely does technology receive the type of concentrated, strategic forethought it deserves. But perhaps now is the time to change that. Improved entity management tax technology can help your organization be more accurate and compliant, streamlining your work processes, increasing your transparency, improving your ability to collaborate across global markets and providing you with powerful data analysis tools. Below we’ve highlighted five key areas in which technology can help you create a tax department prepared to meet the challenges of the future:
1) Accuracy and Compliance for Tax Departments
Multinational organizations face increased regulatory pressure from a wide number of fronts, requiring them to share business and identity data with multiple governing bodies. This data ranges from the allocation of assets and taxes paid to the location of facilities, business offices and the current rosters of company directors. To ensure accurate reporting and maintain compliance, corporations are looking for entity management systems that can create single-source master files and offer country-by-country reporting.
These master files allow corporations to take advantage of automated data, which enables users to pull historical “point in time” metrics and roll unchanged data from year to year seamlessly. More importantly, master files provide a single source of truth, which enhances the consistency and accuracy of your reporting. Combined, these features can help your organization realize comprehensive data management and increased knowledge ownership and control.
2) Streamlined Efficiency for Tax Departments
In years past, garbled spreadsheets, misplaced information, siloed data and shared drives have been roadblocks to greater workplace efficiencies. The advent of dashboards, cloud-based systems and single-sign-on platforms has allowed users to streamline work processes, eradicating the previous time-consuming bottlenecks. Enhanced tax technology makes it possible for users to gather and collect data from a wide variety of company sources and put it to use in income tax or tax provision work papers without interruptions. It also makes it easy for users to keep tax balances up to date, even as the book numbers continue to change. Quality entity management tax technologies help tax departments facilitate the flow of data and avoid the cost and time-loss inherent in duplicate work.
3) Transparency for Tax Departments
In recent years, multinational groups such as the G7 and the Organization for Economic Co-operation and Development (OECD) have committed to more comprehensive and transparent approaches to governing the ways in which global organizations comply with local and global tax laws. Echoing these concerns, tax authorities from countries across the globe have initiated aggressive programs to investigate and prosecute tax evasion and money laundering. The tougher laws require companies to provide more information to governing agencies, and be ready to justify processes and decisions.
Robust tax technology can help corporations avoid the financial and reputational repercussions companies may face if their explanations are found wanting. Tax technology breaks down the barriers that separate different divisions of corporate tax, providing users with a more holistic look at the interactivity of the corporation’s tax functions. In addition, entity management technology strengthens a tax department’s audit substantiations and decreases the administrative burden associated with global reporting mandates.
4) Global Collaboration for Tax Departments
The great myth of the global economy is that it erases geography, bringing each country together under the banner of business. In reality, there are still differences that must be managed and worked around: differences as subtle as language and culture, and as irrefutable as time and space. Entity management technologies cannot erase these distances, either, but they can help bridge the gaps. Easy and versatile data-sharing technologies can be the next best thing to sitting across the table from your faraway coworker.
Tax technology can create standardized data processes that remain constant as the information moves from country to country. These technologies can also help alleviate the potential for misunderstanding or mistakes that result from language barriers or local reporting differences. These country-specific solutions give users the ability to work with colleagues from anywhere in the world just as easily as if they were down the hall.
5) Improved Data Analysis for Tax Departments
Tax departments depend on quality data to inform their decision-making, just like every other business sector. Improved data allows them to analyze results and determine best practices for the future. Tax technology enables users to gather and visualize data from their organization’s ongoing ventures, pinpointing trends and identifying areas of concern. Users can create dashboards specifically designed to monitor key performance indicators. Secure benchmarks give users the ability to compare their organization’s performance with the performance of its peers, creating a clear and informed vision of the organization’s place within the industry. Entity management technologies can also help companies understand the effects of upcoming changes to tax policy by creating detailed scenarios and forecasting models.
While tax technology is not going to provide a solution to all of your organization’s challenges, it can be a game-changer. Robust entity management technologies allow you to improve your accuracy and ensure deeper levels of regulatory compliance. They can streamline the costly and time-consuming inefficiencies associated with inaccessible information and duplicated work and increase your organization’s operational transparency. Country-specific solutions help you collaborate with coworkers regardless of their language or location, and the improved data analysis capabilities make it possible for your organization to develop a new understanding of their results and practices.
Still wondering whether entity management technology is a good fit for your tax department? Contact a Blueprint representative for more details.