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Tax functions – key challenges and opportunities in tax technology

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Finance transformation

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Tax departments can be either centralised or decentralised and for the most part, are an integral part of the Finance arm of the business. In some multinational companies, the tax function can also operate independently.

Tax functions

Typically, the tax department carries out the following functions:
  • Fulfilling all tax compliance processes – the key focus for every tax department is in essence to fulfil compliance requirements timely and accurately.
  • Managing the operational or transactional taxes – indirect taxes applied to purchases and sales transactions, mainly influenced by the supply chain from a purchasing perspective and route to market from a sales perspective.
  • Accounting for income tax – carried out on a quarterly, semi-annual, or annual basis. The direct tax team will examine the immense amount of data required to determine the income tax liability for the organisation.
  • Assisting with key decision-making – tax strategy or planning teams assist in key business decisions such as a new supply chain route, new product launch, and most importantly business restructuring activities.
  • Transfer pricing and profit tracking – a crucial role in the process of trading goods between parties and across borders, tax professionals ensure prices are aligned with local market prices or OECD regulations.

Key challenges

Tax professionals face similar challenges across most organisations:
  • Quality of data
  • Consistency of data (Data Standards)
  • Compliance processes
  • Staying informed of regulatory changes
  • Tax tools to support strategic business decisions

Quality of data:

This is one of the biggest challenges faced by tax departments. Lack of quality or accurate data leads to poor tax decisions or loss of opportunities to recover more taxes, as well as impacting the timely completion of compliance processes.

Usually, IT teams do not involve the tax department in ERP data governance and do not consider tax implications when defining the data standards in upstream master data.

Consistency of Data:

The use of varied systems for different processes usually results in inconsistent data across the process chain. Often, compiling and standardising data for use involves considerable manual efforts if the right tax technology is not in place.

Compliance Processes:

MNCs are required to satisfy different geographical compliance requirements in very tight timelines. As governments are moving towards electronic tax filing, without appropriate tax software in place, tax departments are struggling to meet deadlines. Failing to comply with deadlines risks not only heavy financial penalties but also risks the organisation’s global reputation.

Regulatory Changes:

In some countries, legislative changes are more frequent than others. Most governments are moving towards e-governance and e-filings so some recent changes are related to business operations, such as electronic invoicing. To remain up to date with continuous legislative changes, advancements in technology like ERP systems are essential to continue business operations.

Tax Tools:

Tax tools allow for the creation of data models for the simulation of business scenarios based on internal and external market factors that influence key strategic decisions. Without the appropriate data analytics tools, business intelligence reports, and executive dashboards, the collation of data is a manual and time-consuming process for tax departments.

A key function of tax technology is to allow for the efficient performance of value-adding tasks such as planning and strategic decisions in line with the organisation’s objectives.

Providing the right resources

Tax professionals are experts in their field but may lack technical knowledge of system processes and data management. Partnering them with tax technology experts ensures the right processes and solutions are in place to meet business needs.

Business process reengineering

Analysing and redesigning processes through the implementation of tax technology helps to remove non-standard, poor quality data. This allows tax teams to focus on value-add, strategic tasks, knowing compliance work won’t be disrupted by bad data.

Improving the compliance process

Integrating robotic process automation with ERP systems removes repetitive manual tasks and improves compliance. Using AI and machine learning to carry out predictive analysis of transaction data helps detect potential issues well before deadlines.

Using the latest technology

Using best practices in ERP systems like SAP S4 HANA, NetSuite ERP, and Dynamics is key to efficient tax technology. Automation of tax determination and compliance is possible with external tax engines that have native integrations with ERP systems.

Helixr’s strengths

Our professionals are experts in leading projects in the tax technology space and are an ideal partner for your journey. We provide experience in:
  • Implementing best practices to derive value for tax departments
  • Developing and enabling RPA and AI solutions to automate processes
  • Delivering industry-specific solutions in the most popular ERP systems that meet legal and fiscal requirements
  • Integrating external tax engines like One Source and Vertex with ERP systems
  • Providing solutions for the most complex tax systems, such as Brazil and other LATAM regions
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Helixr Ltd HQ

Helixr Ltd Innovation

Helixr Limited Ireland

  • +353 1 437 6901
  • Helixr, 92 George Street Lower, Dún Laoghaire, Dublin, A96 VR66, Republic of Ireland

Helixr India Private Limited

  • +91 90100 08310
  • Helixr, P.No.18/2, Sector III, HUDA Techno Enclave, Madhapur, Shaikpet, Hyderabad-500081, Telangana, India
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Phani Sabnivisu

Founder & Executive Director

phani.sabnivisu@helixr.com

Phani loves a new challenge. The intricate world of finance and tax functions have provided him with plenty of them over the last 25+ years. He has worked on projects in Europe and the US, and the APAC and LATAM regions, including in the most tax-complex countries like Brazil and Argentina.

Working with ERP systems, external tax engines and process automation technologies, Phani has guided many multinationals across a variety of industries to optimise their operations. His calm, dedicated and friendly manner has lead organisations through best practice, data modeling and defining the right technology for their business. 

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