Tax Technology Imperative in Finances

Douglas Martin, Senior Manager, Finance, QBE Insurance

Technology is integral in minimising manual effort, increasing accuracy, and facilitating tax and finance leaders in transitioning their focus from transactional to value-added services.

Tax and finance leaders encounter a challenging tax environment. At the same time, tax authorities are digitising tax administrations and increasing scrutiny at a transactional data level while there is pressure to reduce costs within tax functions. In these scenarios, augmenting technology within the tax function today is more of an imperative than a better option. Therefore, it is important to understand how and where technology can add value to a tax function with fewer investments.

Automated Tax Data Collation and Reconciliations

Tax teams spend considerable time grappling with ERP data and spreadsheets from different systems for tax compliance, statutory reporting, and internal reporting. There is great automation scope in this area. The data collation could be automated by creating a tax data warehouse using data ingestion, extraction, transformation, and loading (ETL) and online analytical processing (OLAP) database technologies. This offers control to the tax function over its data, facilitates ease of reconciliation between various data sets, enables future retrieval, and saves significant time.

Digital Tax Governance

With the implementation of faceless assessments and appeals, companies must be prepared with tax data and documents. Today, most tax functions maintain tax status on spreadsheets and documents on shared drives. There is minimal information regularly available to tax and finance professionals. To address this, organisations can implement digital tax compliance and litigation status, tax refunds, tax losses, adequacy of tax provisions, etc. With smart alerts, tax leaders could have full control over upcoming deadlines and hearings. Implementing such technologies on SaaS models reduces the cost of creating or maintaining IT infrastructure, resulting in a low total cost of ownership.

Tax Data Analytics

Tax authorities could help tax and finance leaders proactively recognise inaccuracies, inconsistencies, and leakages at the transactional level and enhance the tax process by acting on such data insights. Data analytical tools can help drill down on several purchases and sales exceptions using GST and ERP data. Technologies facilitating 26AS reconciliation for Tax Deducted at Source (TDS) will help digitalise the process with enabled dashboards providing potential tax leakages due to erroneous TDS and TCS entries by customers and suppliers.

Automating Repetitive and Voluminous Tasks

Organisations with numerous transactions often need to spend a significant amount of time on repetitive tax-related manual actions for such transactions. Robotic process automation (RPA) or process automation software can significantly reduce tax teams' time spent on such activities.

Facilitating technology within a tax function does not require a long and winding implementation process. Some technologies are available, and others require customised interventions. Embracing a modular approach operates well from a budget and optimal adoption perspective. Therefore, technology is the answer to minimise manual effort, elevate accuracy, and enable tax and finance leaders to shift their focus from transactional to value-added activities.