Treating tax relevant data as a strategic asset by the in-house tax department
- Steef Huibregtse
- Sep 28, 2021
- 2 min read
Updated: Oct 9, 2023
By: Nupur Jalan, Steef Huibregtse, Jasper Verkamman.
The power of the tax data can be harnessed by interlinking tax technology tools with emerging technologies. Data-driven analysis automation, and other tax technology tools provide various techniques to improve the efficiency of tax-relevant data analyses. Considering that data management has become the biggest challenge for taxpayers and tax administrations in the era of increased transparency and disclosure requirements, combining tax technology tools with the Enterprise Resource Planning (ERP) and other data mining tools may help companies to manage data requirements effectively.
It has become essential that corporations manage the information provided in various disclosures adequately as the data provided in many of the reports like for example Country by Country reporting (CbCR), Directive of Administrative Cooperation (DAC)-6, Automatic exchange of information (AEOI) reporting is used by tax authorities for various other purposes. For example, the Organization for Economic Cooperation and Development (OECD) used data provided in CbCR for impact assessment under Pillar 1 and Pillar 2 solutions. Further, for companies that have made CbCR data public, several stakeholders rely on the data of public CbCR for various financial and other aspects as the data provided in CbCR provides a global picture of companies operations and related financial data. Internally, CbCR can also be turned further into a valuable tool by using this data or combining these data with FP&A numbers to analyse various business risks and prepare an early defence for the predicted risks.
Considering the increasing importance of tax data and the requirements of inputs from different functions of the organisation in various tax reports, in-house tax departments have to be involved in all aspects of the business these days because of tax authorities' enhanced compliance and disclosure requirements in multiple countries. Hence, treating tax data as a strategic asset for other functions would also increase the efficiency of different departments i.e. in an ideal system tax should move higher in the food chain in companies, i.e., for example: tax departments requirements of different data points should be kept in mind by the accounting, FP&A and other team. Thus, where an organisation is introducing finance tech or legal tech, appropriate consideration should be given to the agile needs of data points by tax departments, so that tax tech can be combined efficiently with finance tech and legal tech.
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