Businesses are increasingly turning to indirect tax technologies to help them ensure accurate tax determinations, lift the burden of in-house tax research from their shoulders, and provide easy access to all of the data that’s needed if an auditor comes knocking.
But tax engines are not plug-and-play. As a senior manager for tax digital consulting with Grant Thornton, I’ve seen companies achieve exceptional results, but I’m also familiar with the challenges that can complicate and slow an implementation. These often vary depending on the size of the business.
The following two sets of challenges are fairly common. First, here are some roadblocks that small and midsize businesses typically tend to struggle with a bit more:
- Master data challenges in terms of volume and quality. Even a relatively small, US-only implementation will require many thousands of individual pieces of tax-relevant data as well as processes to ensure the accuracy of those inputs.
- Tax rules and regulation changes. Tax-relevant data is a moving target. The U.S. alone is home to 10,000-plus discrete taxing jurisdictions, and rates, rules and codes are constantly changing. SMBs tend to conduct their own research, or outsource some or all of it. The new data must be entered into the ERP system or home-grown tax application. Business changes can complicate things too, with shifts in taxability as the business model changes or new products and services come online.
- Traceability of requirements. Keeping track of initial design goals all the way through comprehensive testing, to solution, to documentation can be challenging.
Enterprises often face many of the same challenges that SMBs encounter, as well as some that of their own, including the following:
- Multiple enterprise resource planning systems, transaction platforms and source systems. Large businesses often run multiple ERP systems, especially where there’s a history of M&A activity. Other tax-relevant platforms, whether home-grown or purchased, tend to proliferate in siloed fashion. It’s important to lay out a tax technology roadmap that considers and aligns with other current and planned enterprise technology changes (especially regarding ERP implementations and upgrades).
- Lack of process standardization. Processes may vary from one country to another, creating complexity and localization requirements. Processes may also lack standardization among different companies or business units, which can cause significant delays.
- Multiple time zones. Time differences can complicate timeframes and team coordination for global implementations.
- Multiple geographies. Documentation, change-management, and testing can be challenging across boundaries.
For all of these challenges, robotic process automation (RPA) is a powerful solution. RPA can take on much of the heavy lifting in your tax engine project. At Grant Thornton, we have brought to market an RPA-powered indirect tax implementation platform, te.x. When you upload your tax and business data to the te.x Cloud Portal, the RPA component of the solution automates many tasks that you would otherwise have to tackle manually, including analysis and validation of the data; solution design; tax engine configuration; and configuration testing.
If you’re considering a Vertex implementation, you’ll want to take a close look at te.x and how it can simplify and accelerate your project.
Please remember that 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. The views and opinions expressed in Tax Matters are those of the authors and do not necessarily reflect the official policy, position, or opinion of Vertex Inc.