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2023 is the year for tax professionals to focus on the human component of technology and what digital transformation means for your business. There is a raft of legislation, either in place or coming into play soon, which have pushed digitisation to the top of everyone’s agenda, from the UK’s Making Tax Digital (MTD) programme to the incoming global Base Erosion Profit Shifting (BEPS) 2.0 initiative. These mean that organisations must have in place the right talent – and tools – to ensure compliance and transparency.
What is MTD?
MTD is a landmark in digital compliance and requires all VAT-registered organisations to complete returns online, thus minimising the margin for error. It is driving tech investment, with speed, efficiency, and accuracy becoming key priorities. Companies are now more alert to the importance of correctly filing their taxes first time round, particularly as tougher points-based penalties will be incurred for inaccurate and late filing.
In turn, this creates a challenge for organisations who don’t have adequate processes or skills in place to complete their returns effectively and efficiently, leading to time-consuming manual entry with the potential for human error. However, tax professionals didn’t spend years training to undertake laborious data entry.
The importance of clean data
Ever since the introduction of GDPR, and the creation of roles such as Chief Data Officer (CDO), the industry has been undergoing a quiet revolution. Data quality has come to the fore with the old adage, “garbage in/garbage out” proving the necessity of clean, consistent data across multiple siloes. We need to understand the data and where commonalities exist so when it inevitably changes, it will recalculate in all the appropriate places.
That’s where the Tax Technologist comes into play. Put simply, tax technologists specialise in the use of technology to streamline tax processes and ensure compliance with MTD and other regulations. The challenge is that many businesses have upwards of fifteen different tax-related systems in place when really the upper limit should be more like five; cloud-based, interconnected and best of breed.
The role of the technologist
Tax technologists help organisations navigate the increasingly complex and rapidly changing landscape of tax regulations and compliance, with the skills and knowledge to ensure that their organisation is using the right tools and systems to comply with MTD regulations. By using software to automate and digitise tax-related tasks, tax technologists can help organisations reduce errors and improve accuracy, reducing the risk of penalties and fines for non-compliance.
Moreover, tax technologists are important in helping organisations to stay current and anticipate future changes in tax regulations and compliance requirements. They can provide valuable guidance to organisations on how to prepare for new laws and regulations, such as MTD and BEPS 2.0, and
can help organisations to stay ahead of the curve when it comes to new technologies and best practices in the tax field.
The globally-agreed BEPS 2.0 directive, is designed to harmonise corporation tax on a global level. Rather than allowing companies to offshore profits, the same minimum rate of 15% will apply to all companies with a turnover of over €150m. This is another key driver behind the rise of the tax technologist for organisations in scope of the requirements.
Technology front and centre
The clue is in the title: technologist – without the right tools, software and support, tax technologists won’t get far. Many businesses still rely on the decades old proprietary platforms, fearing the unknown and change. In the face of tighter budgets and increasing workloads, they are wary of investing in new solutions, even though they will make life easier.
Ultimately, compliance is the number one priority. By introducing versatile cloud-based or hybrid on-premise tax-specific solutions, companies can only pay for what they use and reduce the burden on internal IT teams, leaving the tax technologist to focus on ensuring compliance and minimising risk. With the right partner, what might seem like a daunting journey can become a walk in the park.
Tax technologists know how existing systems work together, what new systems need to be put in place, and how data flows, helping to future-proof your business. As the importance of technology continues to grow, a Tax Technologist will be the ultimate data and technology evangelist, enabling these two crucial parts of the tax department to work together and add value to the business.