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Improving the tax function in your organisation

Dec 10, 2018
Tax functions are facing an unprecedented level of pressure due to the constantly evolving legislative and regulatory landscape. John Farrelly explains what organisations can do to ease this burden.

Tax legislation and regulation has been ever changing in 2018, and it doesn't look like it's going to get any easier next year. As a result, tax risk is now a constant topic of discussion in the boardroom. And now, the tax authorities are digitising and exploring how they can use innovative technology to drive efficiency and effectiveness in their operations. More and more organisations are using digital channels to address global market opportunities and explore new operating models. All of these put tax leaders and their function squarely in the spotlight. To alleviate these pressures, there are a number of things tax and finance leaders can do. 

Assess your current functions

They can start by reassessing their current functions to determine if they are fit for purpose in this new digital and globally connected world. Organisations should understand internal and external stakeholder requirements; map the high- and low-value activities; and develop an operating model that is fit for the future.

Drive innovation

The next thing that should be high on the list is to see how technology can be used to drive innovation and new ways of working. A recent EY survey on technology trends impacting the finance functions found that data analytics, robotic process automation, cloud (and software as a service), artificial intelligence and blockchain are all going to disrupt our current working environment and all of these apply to the tax function. It’s time to really investigate how these technologies could be used to your advantage.

For example, the combination of the human mind (tax professional) and machines (artificial intelligence) can drive significant cost savings and efficiencies for tax functions. It takes a human approximately 75 hours to analyse and classify 10,000 rows of transaction data for tax purposes. A machine can do this in seconds. When you consider the amount of time spent doing this kind of processing in tax functions, you start to see the benefits of artificial intelligence.

Automation

Another very relevant area for tax functions to consider is robotic process automation (RPA). What are the repetitive, time-consuming and tedious tasks that consume the valuable time of your staff?  Many of these tasks can be automated without any change to underlying systems or processes already using RPA. These tools are inexpensive to implement and manage, and have a rapid return on investment. 

Cloud and SAAS

Cloud and Software as s Service (SaaS) is now commonplace and enable tax functions get easy access to software applications on-demand. Blockchain, on the other hand, is probably a little further down the road for most organisations, but will create both risks and opportunities for tax as it evolves.

Data

The most important thing to focus on is your tax data. Data is the raw material needed to support any technology-led innovation. We are seeing tax authorities in all jurisdiction requesting data, either as part of the compliance reporting process or as part of a tax audit. Getting a handle on your organisation’s data is critical from a tax perspective. Understanding how the data flows through your organisation’s system, ensuring easy and timely access to this data and having the ability to visualise and analyse tax data in near real-time is becoming a must-have for tax functions. 

John Farrelly is Head of Tax Technology at EY Ireland