Time is money and Tax Automation saves on both!

As tax experts, how do you view technology?

Eliza Alberts-Muller: First, it may be good to set the scene. Our current evolution is that of a digital nature, regardless of whether you wish to be part of it or not. However, the pace of the technological evolution is somewhat faster than we will have predicted. Did you know, in 1991, there was only one website and, in 2014, that number surpassed one billion – that is simply unfathomable. We as tax professionals, therefore, need to act now and embrace the new technologies that are digitizing our society, and forcing legislators and governments to step up their game.

 

Monica Erasmus: I agree. I think that the focus is on whether a tax department can reach a workable level of technological maturity. Innovation leads to solutions but deciding which is right is another matter as there are no silver bullets. Personally, I had more than 80 meetings this year alone to discuss our transfer pricing documentation management tool, of which only a few companies enquired about the back-end technology.

Was this surprising? No, but it shows that there is a disconnect between technological know-how and how they translate into the tax world through tax tooling. In essence, automation only enables processes, enriches calculation capabilities and enhances data mining. Our goal is to minimise the one-tool-one-trick approach that focuses only on ‘how can I make my transfer pricing report?’ – and broaden it to include how to simplify and harmonise the transfer pricing documentation process; divide the accountabilities in this process; and find the baseline process, master data and management reporting needs that fort the organisation, and with which other software, should any transfer pricing tooling interact.

 

Could you elaborate on how technology is impacting indirect tax, as well as transfer pricing?

EAM: Well, the invention of the ERP system(s) in the early 90s has allowed us to integrate the various business functions into one platform, the demand for which came from the increased scale and scope of MNEs. This single platform is an offering that, combined with the globalisation and centralisation of supply chains, makes indirect tax determination and compliance more intricate – a prime example of how technology increases the need for advanced VAT and tax automation solutions.

Countries are shifting towards more state-of-the-art processes due to technological considerations; for example, big data is leading to more-sophisticated reporting and auditing systems. The demand for transparency – driven by technology – and the fight against tax fraud has also led to change, with the implementation of standard audit file for tax (SAF-T) in an increasing number of countries – a step towards government’s having direct access to your transactional data. Brazil already does this and many others are considering it.

 

ME: In the past 12 to 15 months, most large companies have focused on how to identify, retrieve and report data for country-by-country-reporting (CbCR) purposes. In the past six months, companies are initiating more in-depth discussions around the automation of transfer pricing documentation. In terms of off-the shelf transfer pricing software solutions, the technological functionality is quite fragmented and bespoke, but there is a lot of investment and development going as we speak to address this tax technology vacuum.

“It’s time to invest in technology, the iron thumb has been lifted and tax authorities are not only supporting change, but rather driving change”

What has surprised me is the shift in openness of tax departments to new technologies, like cloud computing and opensource, and software as a service – SaaS, which is extremely scalable and nurtures self-service computing. SaaS could relieve the in-house IT department of …

 

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