Vendor Talk: GST and the future of tax technology

While technology may not be the answer to all tax-related challenges, it will act as an enabler, increase accuracy and compliance, streamline processes, increase transparency and lead to better collaboration globally.

  • Published On Mar 9, 2018 at 08:42 PM IST
Read by: 100 Industry Professionals
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By Vinay Sethi

It is well-known that tax departments across the world have always been challenged to keep pace with the quick-changing landscape. In today’s evolving tax landscape, the ability to be proactive and predictive is what keeps a corporation ahead of the game.

Redefining what corporations do and how they do it is becoming more and more crucial to stay competitive in a world where technology is evolving at an unprecedented rate.

Globally, corporations are fast recognizing the need to be technologically well-equipped in advance to effectively tackle the challenges posed by external factors.

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Tax technology has moved beyond the spreadsheets to cloud-based systems, single sign-on platforms and many more that provide immense opportunities to standardize tax processes. What is enabling businesses to automate processes and use tax technology is the world’s increasing complexity. Tax technology in 2018 will only continue to evolve.

In the Indian scenario, the tax profession has undergone a significant disruption over the years. For example, modernization in taxation brought on by e-governance and digitization, is prompting businesses to invest in tax technologies and look upon it as more than a back-office compliance process.

The Goods and Services Tax (GST) — the new one nation-one tax regime — has changed the tax function overnight. With such fundamental change to the way organizations conduct business in the GST regime, remaining tax compliant at all times is not an easy task.

GST has made tax management and practice a vital component of business strategy, as organisations usher in greater transparency, take responsibility for managing risks, create a competitive edge for their businesses, and ensure better and efficient compliance. This is, however, only the beginning of the tax revolution — the future of tax technology in India is more promising than before.

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Talks with people at the centre stage of tax administration, however, reveal that adoption of tax technology in India has been rather slow owing to a lack of orientation in key areas of taxation.

External factors, such as complex regulations and frequent changes made by the GST Council, are partly responsible for the lack of momentum. On a more positive note, businesses are laying a strong foundation for taxation. This will help any organisation to make quick decisions and focus on key strategic areas.

Tax technology enables organisations to be more accurate and compliant, streamline important processes and increase transparency, which equips the tax department to face challenges head on.

Additionally, tax technology frees up time by eliminating duplication of work and allowing teams to shift focus to more strategic business interests. This enables the organisation to enhance its tax profile and build a sustainable framework for the future.

Technology also helps multinational companies deal with the complexities and challenges of global tax rules and regulations, especially given the many variables such as different time zones, language and data access barriers, understanding various reporting requirements per country, and more.

Technology supports efforts by tax departments to transcend these boundaries and accomplish tasks quickly and efficiently.

Globally, the next few years will see exponential change in tax technology as organisations rush to adopt new tax systems. Let us look at some of the biggest shifts in this technology.

Globally, large corporations have been using Big Data capability to solve new digital tax reporting and accountancy challenges. Big Data and Advanced Analytics are being applied to generate natural language explanations of complex tax form calculations.

This will lead to many new innovative tax products, such as advanced ‘What If?’ scenario modelling, Tax Optimisation Engine/Tax Return Advisor, Theory vs. In-Practice (e.g. law vs. tax court precedents) identification and comparisons, and robust audit risk assessment.

Blockchain will drive the tax ecosystem in coming years. The distributed ledger capabilities and transparency will create disruption and opportunities both within the tax and accounting profession.

Global companies are exploring Artificial Intelligence in the area of tax compliance, to create the ability to train cognitive solutions on mathematical challenges. Data analytics and cognitive technologies will continue evolving and will make the audit process more effective and efficient.

Alongside these trends is Convergence. Emerging technology is not just developing at a rapid pace but is also converging and creating new areas of interest.

For instance, advanced data analytics and new areas of data science are growing out of the intersection of blockchain technology and big data.

The future of taxation in India is exciting and businesses need to quickly embrace technology to stay relevant. While it may not be the answer to all tax-related challenges, it will act as an enabler, increase accuracy and compliance, streamline processes, increase transparency and lead to better collaboration globally.

From enhancing compliance to optimizing data to elevating strategy, tax technology certainly helps build a sustainable framework for the future.

The author, Vinay Sethi is Head - Market Development, Tax and Accounting, South Asia, Thomson Reuters.
  • Published On Mar 9, 2018 at 08:42 PM IST
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