“Trying to address the challenges the changing tax landscape is bringing without the use of technology is really difficult,” says PwC tax technology and transformation leader Johnny Wickham. “With emerging technologies, we’re in a better place now to capitalise on the opportunities. A roadmap outlining how technology can better support the tax function is what is needed.”
But the challenges are mounting, he adds. “Organisations are finding it increasingly difficult to satisfy their domestic and international tax reporting obligations.”
Those obligations are set to increase still further. “Tax administrations, including Irish Revenue, are looking at different ways of implementing digital reporting requirements, or increasing the need to reconcile transactions across multiple filings,” Wickham explains. “Organisations are being challenged to provide transaction-level information to tax authorities in real time or near time. That’s a real challenge, and it’s putting pressure on tax and finance teams to set up their systems and processes to have data in the right format to deliver it to the tax authorities’ specifications.”
Adding further to the challenge is the fragmented approach taken by tax authorities to date in implementing these obligations. “Different tax authorities have different systems,” Wickham notes. “Those differences do present an additional challenge.”
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Organisations would naturally prefer a more standardised approach on the part of the tax authorities, and there may be a glimmer of hope on the horizon. “There has been a public consultation across the EU, and we would expect that Ireland and other countries will consider the output of that,” he says.
Wickham outlines another challenge increasing in the area of controls. “Tax authorities want to see robust processes from raw data input all the way through to submitted returns, and that requires companies to have the right systems in place together with clear evidence of the processes being followed. So governance is also extremely important.”
Nevertheless, organisations will need to leverage technology to satisfy these obligations. “Technology has come on so much in recent years and presents a great opportunity for tax functions to play a more strategic role within their organisations. Also, while the challenges are increasing, technology can put tax functions in a better place to deal with them.”
The benefits of using up-to-date tools are wide ranging and begin with increased efficiency. “That’s very important as it’s very hard to both source and retain good tax professionals at the moment,” Wickham notes. “Some of the tools available can be used to automate mundane, repetitive tasks, freeing up tax professionals to perform more strategic value-added work for their organisations.”
He describes the advances in low code/no code type solutions with “drag and drop” functionality as empowering tax professionals to automate data based tasks and processes with the same ease as they would have experienced with spreadsheet functionality in the past.
“Reducing the prospect of manual error improves the strength of the compliance process as a whole. A lot of recurring tasks can be automated using smart tools, which don’t require any coding expertise on the part of the user. Extract, transform, and load [ETL] tools like Alteryx can be used to cleanse, blend and transform data from multiple sources, for example.
“We have supported several tax and finance teams in developing their own skills and implementing these tools to streamline repetitive tasks and processes. At PwC Ireland, most of our own people have gone through our Digital Academies to help them integrate these tools in their everyday work.”
We have supported several tax and finance teams in developing their own skills and implementing these tools to streamline repetitive tasks and processes
That doesn’t mean that existing systems should be ignored or dismissed. “It’s not just about new software and tools,” Wickham says. “Unprecedented levels of transformation are being undertaken by organisations as they shift to cloud-based Enterprise Resource Planning [ERP] systems. This presents an opportunity to revisit the existing tax configuration as part of that migration. Tax should have a seat at the table when such finance transformation initiatives are being discussed to be in a better position to help define a more efficient tax function.”
While these technologies may obviate the need for some more specialist data extraction/coding skills, it will become more commonplace for data analytics and other technology type skills to be embedded in tax teams.
“Data is fundamentally the most important challenge,” Wickham says. Having data management skills in the tax team will be really important to develop and execute transformation strategies within the tax function and organisations generally. But we are seeing a natural evolution of the tax profession. Tax professionals of the future will likely be highly proficient in data analysis, adept at process mapping, change management and will come from more varied backgrounds.
Wickham advises organisations to take three key steps when seeking to leverage technology to maximise the efficiency of the tax function.
“The first is to identify the critical processes and the pain points you want to address. Next is to look at the skills, people and technology you already have in place and how they can be leveraged to meet the challenge – that will help identify the technologies and tools you might need to acquire. Finally, build a clearly defined tax technology roadmap that addresses the critical processes to enable you to invest in the right scalable solution.”
For more information, see www.pwc.ie/taxtech