Indirect Tax: Your Complete Tech Toolkit

Indirect tax is a notoriously tough nut to crack for even the most tech-savvy organizations. But tax leaders can call on a surprisingly broad array of automation solutions. A Tax Executive article, The Changing Landscape of Indirect Tax, takes a close look at some of the most powerful options. The authors are members of Deloitte’s US indirect tax practice.

Any automation initiative should start with a step back, the authors note, to review all areas of the indirect tax life cycle, including “master data setup; indirect tax calculation; tax computation and posting; and preparing, populating, and submitting tax returns. From there, companies can determine areas of immediate exposure or potential opportunity.”

Artificial intelligence (AI) plays a significant role in those next steps. AI technologies that combine visual analytics and dashboard capabilities are particularly useful, enabling companies to identify error rates and the potential causes of tax over-or underpayments. Additionally, machine learning (ML) algorithms, specifically those that use unsupervised learning methods, can potentially predict the future taxability of transactions. 

Many AI platforms incorporate a tax table that can help companies calculate a potential refund and overpayment exposure, and identify potential risks before an audit.

In addition to AI and ML tools, the technology options include:

• Globally integrated tax platforms, which automate manual engagement tasks, connect and centralize tools, and leverage technology to create an intuitive digital experience;
• Technology-enabled return preparation that enhances efficiency and quality;
• Data analytics dashboards, which provide visual representations using heat maps and tax-trend analyses;
• Assistance with automated monthly compliance data extraction processes;
• Smart optical character recognition.

With change agents like the Wayfair decision, the rise of remote work, constantly changing taxability guidance, and other factors, the indirect tax landscape remains challenging, the article concludes. Innovative technologies like these “are key to efficiently managing the entire indirect tax life cycle.”