8SEPTEMBER 2021IN MYOPINIONBy Soorashree Sadekar, Associate Director ­ Transfer Pricing ­ Americas, AIGWith a constantly changing tax landscape, increased pressure of resources, and the COVID-19 pandemic, companies are focused on finding ways to do more with less. Technology becomes a natural solution when trying to drive efficiencies. However, with so many technology alternatives available, the choice becomes increasing complex.How do you choose the right technology? Let's start with an example. Entities in the UK are subject to both Diverted Profits Tax (DPT) and the Mandatory Disclosure Regime (MDR). Simplistically speaking, the MDR requires corporates to identify and disclose "reportable transactions" within 30 days of when they are made available. The DPT requires UK corporations to identify and pay additional tax on transactions that are considered to divert profits outside the UK. In both cases, corporates have to analyze transactional data to verify whether transactions would be reportable under MDR or would be subject to DPT. · Start with identifying the problem(s) that you are trying to solve. A clearly defined problem will assist you in refining the ask. Analyze existing people, processes and tools to document current processes and bottlenecks. Track and evaluate changes in tax requirements to identify overlapping requirements, or compliances that might use the same data. Consider whether an improvement in processes or skill sets within the team would support using existing technologies in the organization to meet increasing tax requirementsas that would be the most cost-effective solution and get quick wins. These considerations will help identify the drivers for the organization in adopting new technologies. Let's define the "problem" with MDR and DPT compliance ­ For large corporates that initiate millions of transactions daily, all over the organization, collecting and analyzing data, and meeting the compliance requirements in a timely manner can be a problem, especially within 30 days of the transaction being "made available" in the case of MDR. Here it would be helpful to review historical transactional data to identify different types of transactions, identify transactions that may trigger either MDR or DPT requirements, determine the stakeholders for different transaction types, and establish strong processes and controls to ensure that transactions are identified for review as they are initiated/conceptualized. Technology can support in pulling transactional data, consolidating it and analyzing it effectively, however, it can only help where the rules are standardized and predefined, and processes are consistent and well-followed.· Get support and buy in within your organization. Introducing new technologies within the existing framework is extremely challenging and having buy-in from all relevant stakeholders goes a long way in ensuring a smooth transition. Will this new technology eliminate jobs, or require people to learn new skills? Will new processes be set up or will there be changes to existing ones? Having a well-defined vision wouldhelp in allaying any fears associated with change. Defining the cost of non-compliance is always a helpful factor. Communication shouldclearly articulate the new roles and responsibilities, changes to processes, how technology would be used in the new processes, and its benefits.In the case of MDR and DPT compliance, the vision should define the new process of transaction gathering (will this be a pull from financial systems or obtained manually), analysis, INTRODUCING TECHNOLOGY TO MANAGE INCREASING TAX COMPLIANCE
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