The European Council’s proposed VAT overhaul, U.S. tax reform, the OECD’s BEPS initiative… These regulatory shifts represent major changes in the global tax landscape and they share at least one common feature: they compel companies to produce more data, more frequently. Danny Vermeiren, Vertex’s director of VAT, unpacks the implications of this trend and the challenges it poses to tax performance management while writing in SAPinsider Magazine.
The data demands of the digital era will stretch companies’ tax technology capabilities, Danny notes. He points out that fully 94 percent of the tax executives and managers who attended a tax technology conference in London late last year indicated that their departments continue to rely on spreadsheets. Yet 63 percent described the tax compliance risks that their companies confront as “medium” or “high.”
In a global tax environment where the rules are constantly and rapidly changing, companies can no longer afford to rely solely on spreadsheets and home-grown systems. They may want to investigate tax-specific software that can link directly into their ERP systems to access the data needed to run accurate tax calculations and compliance cycles. The right tax performance engine can enable companies to unify ERP, sales, payroll and other tax-relevant data on a single platform; validate and configure data in real time; enrich data by converting into a tax-ready format; and store and access it easily to meet retention, as well as audit requirements.
Danny identifies four questions that tax leaders can ask themselves as they review their current systems with an eye to future needs:
- Does our tax technology collect all the data we need for reporting?
- Does our tax technology assure the quality of the tax information?
- How quickly and easily can our tax technology be reconfigured to address new tax rates and compliance requirements?
- Does the technology deliver clarity concerning tax-planning-related risks and opportunities (via analytics, dashboarding and querying, for example)?
For another example of how authorities are ratcheting up their tax performance management demands, see Danny’s post Real-Time Taxation Update: VAT Reporting Gets Real (-Time) in Spain.
Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.