Business people walking and talking discussing ideas in the office
Tax & Accounting08 August, 2023

Data challenges for the modern tax function

How should a modern tax function tackle the challenge of data?

Tax teams in Multinational Groups are facing increasing challenges when it comes to data collection and management. At Wolters Kluwer, we understand the critical importance of tackling these hurdles head-on. Our aim is to equip you with invaluable insights gleaned from internal discussions and client interactions, empowering you to seamlessly navigate the complexities of data management. Delve into practical solutions and expert advice to enhance your tax team’s efficiency and effectiveness, including the top three questions to identify tax data sources.

The changing international tax landscape

The global tax landscape is continuously evolving, and tax teams must adapt to new challenges. From BEPS Pillar Two, to Country-by-Country data, tax teams face multiple priorities. The modern tax function must be agile, forward-thinking, and capable of integrating new tax obligations into their processes swiftly and accurately.

Data collection issues for tax teams

Data collection poses significant challenges for tax teams. BEPS Pillar Two isn’t the only issue tax teams are facing, but it is one that comes to mind given recent developments and the onerous requirements it will place on the tax function. However, there are also other complex regulatory regimes that need to be complied with. Controlled Foreign Company rules, transfer pricing rules, passive income rules, to name a few. These require extensive data sourcing, both financial and otherwise.

Additionally, financial data may need different levels of granularity for tax disclosures, which further adds to the complexity and challenges that the tax function will face – as a largely “business as usual” task.

To overcome these issues, tax teams need to ensure the data they use for tax is up-to-date, accurate, and relevant for tax analysis. However, rapidly changing tax requirements can leave software solutions trailing, meaning constant adaptations.

Understanding data sources for tax

Tax teams must be familiar with the various data sources required for tax compliance. These sources include data generated by the business, such as sale or accounts payable transaction detail needed for indirect tax returns, or employee remuneration and pensions information used in corporate income tax return calculations. In addition to this there is data collated or generated by tax teams themselves, such as withholding taxes, tax payable and taxes paid.

To address this challenge, tax teams should categorise data sources and establish effective mechanisms for collecting, updating, and housing the data.

How should you go about identifying these sources? Below are a few questions we think you should be asking yourself to help with this process.

Top three questions to identify tax data sources

  1. What tax obligations do you have? Listing these can help you visualise which obligations have similar data sources, whether the sources tend to be owned within tax or not.
  2. Who are the stakeholders involved in tax compliance? Finance teams, legal departments, tax teams, and data owners from various business units. Start listing the stakeholders and the types of data they have and whether it is used directly by tax or not.
  3. How are you collating data currently? You will already be doing a good job in some areas! Look at those areas that are working well and access how you can build on this. Can you expand on the successes to more areas?

People, process, technology: The threefold approach

To tackle the complexities of data collection and management, a threefold approach involving People, Process, and Technology becomes essential. Engaging with data owners within the business, understanding data collection processes, and adopting suitable technology are all vital aspects.

People engagement

Engaging with people outside the tax function, such as finance teams, is crucial for accessing the required data. Proper communication, collaboration, and change management help ensure data owners understand the purpose of data collection and can provide the necessary information. Collaboration also aids in identifying new opportunities for data collection as software continues to evolve.

Utilising a data store and process mapping

To facilitate data collection, using a Data Store can be highly beneficial. Below is an example of how you can collate and collaborate on various tax data points, which will help with the engagement of people within the tax function and outside. This centralised repository acts as a single source of truth for tax analysis. By housing essential information and definitions for different tax regimes, it provides an overview and ensures data accuracy. The Data Store’s ability to capture specific fields required for each tax obligation enhances its versatility. Clients can define data owners, ensure data integrity and foster a structured approach to data management. With the Data Store, tax teams can streamline processes, improve collaboration, and maintain data integrity.

Additionally, Process Mapping helps understand, document, and improve tax processes, ensuring clarity, consistency, and accuracy.

When was the last time you documented your tax processes? Have you taken the time to review and ensure all touch points are still necessary? It’s common for a current tax process to become a mix of what should be done and “this is how it’s always been done since I joined.” This approach may lead to inefficiencies and missed opportunities for improvement.

By creating a process map, you can take a step back and assess your tax process objectively, identifying areas where enhancements can be made. This helps in streamlining the process, eliminating redundant steps, and ensuring that it aligns with current best practices. This also allows you to highlight areas that data touches each point in your process. This helps you identify your sources, as mentioned above, and inputting the data into your Data Store.

Building a data management roadmap

To get started on an effective data management strategy, create a Data Management Roadmap. This roadmap should outline steps to align internal teams, analyse current processes, and develop a full data strategy for addressing future tax requirements. Start with a simple roadmap, highlighting what to do now, next, and later. Leveraging technology and considering an integrated tax platform can significantly enhance data collection efficiency.

Next steps with CCH Integrator

For those seeking a technology tool to streamline data collection which will allow you to manage your various tax obligations in one place, CCH Integrator offers a single platform solution to manage your tax compliance obligations. Wolters Kluwer continually invests in the CCH Integrator tax platform by advancing the functionality to meet the current and emerging needs of the tax function. Choosing the right technology can support your goal to future-proof the tax function with an adaptable, flexible solution at the cutting edge of technology.

Navigating the data challenges faced by tax teams in a constantly evolving tax landscape is no small task. With proper communication, collaboration, and the adoption of effective technology solutions like CCH Integrator, tax teams can streamline data collection and management processes, ensuring compliance with tax regulations and driving their organisations towards greater success in an increasingly data-driven tax world. The modern tax function must embrace change, stay agile, and leverage technology to meet the ever-changing international tax landscape successfully.

Learn More About CCH Integrator

Watch the full webinar recording on managing tax data collection from disparate systems

Screenshot of Data challenges for the modern tax function webinar
Watch Webinar
CCH Integrator
Transform your business with the global tax platform that keeps enterprises a step ahead in a constantly evolving world.
Back To Top