It is very rare that technology receives the kind of strategic, concentrated, forethought it deserves. But perhaps now is the time for things to change. The evolution in tax technology can help the business to be more accurate & compliant. It helps to streamline the work processes by increasing transparency and improving the ability to collaborate across global markets. Also, it provides businesses with powerful data analysis tools. In this post, we will see how new tax technology helps businesses with their current and future challenges.

How does Tax Technology help?

Most tax technology solutions in the current market can be broadly categorized into the following four categories:

1. Compliance  
2. Insights
3. Process management
4. Accessories, components or infrastructure (this enables/facilitate 1, 2 or 3)

Compliance Related Solutions

Compliance related solutions are those solutions which help you to prepare and/or file your tax returns more efficiently & accurately and in an automated way. They might also help you to perform similar automation functions for the purpose of invoicing. These solutions can help you either with specific taxes or with a full range of tax returns from corporate income tax filings, to VAT filings, to even stamp duty. Most tax professionals readily accept that efficient & accurate management of compliance activities is consistently at the core of their responsibilities. Thus, compliance-related solutions are amongst the most common solutions seen in use by the tax departments in today’s time.

Insight Related Solutions

Insight related solutions involve a vast category of technology solutions that provide you with greater insights into the accuracy of your tax-related data; this help businesses to identify potential tax risks upfront and enable them to identify errors or inconsistencies in the tax filings. For instance, this may include software solutions that enable you to carry out sophisticated data analytics for identifying potential errors in the tax reporting, analyzing the margins on transactions for transferring pricing purposes, to identify permanent establishment risks or to help with calculating tax liabilities of the expatriates employed by the organization around the world.

Process Management Solutions

These are the solutions that help organizations with managing either a specific process or an end-to-end process. This solution makes the right information available to the right person at the right time. More specifically, process management solutions may also help you to manage your workflow within your tax function, or possibly within your organization. These are not the solutions that would do anything in the sense that they’re focused more on facilitating & optimizing the process, rather than changing the outputs of the process. As such, they may not even provide you with the insights into your tax data, and they might not prepare the tax returns that you require. Rather, these solutions will help you to manage these processes by helping your organization to operate more efficiently.

Accessories, Components or infrastructure

When we talk about accessories, components or infrastructure, we are basically referring to those hardware & software solutions that have been built typically into your tax technology software or the one that enables/facilitates the automation of compliance or the delivery of the insight related solutions. Examples for this would include the solutions that manage the data extraction process and help you to deliver visualizations of your data; it will include solutions that allow you to store data, such as cloud computing & data warehouses. Accessories, components or infrastructure might not be the most exciting aspects of the new tax technology, but they’ll often be the building blocks which can make the difference between a successful deployment & the one that may not succeed.