Would you like to discover how well-run tax departments are handling the difficulties posed by talent scarcity and regulatory obligations in the rapidly changing corporate environment of today? The secret is to use technical solutions in conjunction with knowledgeable tax experts.

While many firms still struggle with low to moderate levels of technological maturity, tax teams can use technology to their advantage to get past challenges and offer insightful, helpful analysis and advice. Let's explore some of the main issues and chances that corporate tax teams are currently facing, as well as how technology might provide a much-needed boost and relieve some of the increasing pressure.

5 Ways Technology Supports Corporate Tax Divisions

Here are the top 5 ways to empower corporate tax teams.

Simplifying Tax Compliance

Many multinational corporations are finding it difficult to comply with the ever-changing tax laws. Budget constraints and dispersed tax data administration are prevalent problems that raise risk and cause inefficiencies. Tax managers frequently have to spend a lot of time manipulating jumbled data that is kept in several formats in order to assure compliance.

The absence of control and standardization increases the possibility of mistakes and jeopardizes tax compliance. Furthermore, tax officials can now examine corporation filings more thoroughly thanks to their access to cutting-edge technologies. Given that tax audits and penalties are common, especially for under-resourced businesses, this increased scrutiny presents a serious risk to enterprises.

Automation and quality control procedures are crucial to reducing these hazards. Businesses can improve overall tax compliance efforts and lower the risk of errors by optimizing processes and guaranteeing data correctness.

Adapting to Tax Law Changes

Global tax authorities are enforcing stricter laws and calling on businesses to be more transparent. Laws are being passed requiring businesses to provide further financial data, and they are exchanging this information internationally. To prevent tax evasion and promote equitable taxes, the European Commission launched the VAT in the Digital Age (ViDA) program, while the Base and Profit Shifting project on taxes was initiated by the OECD.

Furthermore, the Global Minimum Tax (GMT), commonly referred to as GloBE or OECD BEPS Pillar 2.0, has been implemented globally, imposing new restrictions on thousands of enterprises. Laws pertaining to Country-by-Country Reporting (CbCR), like DAC7, make compliance even more difficult by requiring reporting on digital platforms.

Businesses must gather more data from more areas of their operations, more frequently, and with more depth in order to comply with these changing rules. For timely filings and proper tax computations, this information is necessary. Therefore, in order for businesses to successfully traverse the complicated world of tax compliance and regulatory regulations, good data management has become essential.

Integrating ESG into Tax Strategy

The growing significance of environmental, social, and governance (ESG) factors is causing a shift in the business operations environment. Companies are being forced to reveal more tax-related data by stakeholders who are calling for increased transparency surrounding tax policies. Governments all across the world are simultaneously adding ESG factors to tax laws, increasing the pressure on businesses to give sustainability first priority when developing their tax plans.

Tax leaders need to proactively include ESG concepts in their tax planning and compliance efforts in order to successfully navigate this changing terrain. This means making sure that tax policies comply with newly developed ESG-related tax laws and coordinating them with more general sustainability goals.

Companies that do this not only stand to gain from tax incentives that support sustainability objectives, but they also lessen the chance of fines and damage to their brand from non-compliance.

Overcoming Tax Compliance Challenges

It is getting more and more difficult for many multinational corporations to comply with the ever-changing and complex tax requirements. The resources available for tax administration are sometimes restricted by budgetary limits, making it more difficult to comply with new regulations. Furthermore, tax administrators have a significant challenge due to the decentralized structure of tax data within organizations, where data is kept in various formats and places.

This decentralized method raises the possibility of mistakes and inconsistencies in tax filing in addition to consuming important time. With tax authorities using advanced technology to examine and contrast corporate filings, there is an increased chance of audits and fines. Automation and quality control are crucial in this context to lower risks and guarantee compliance.

Teamwork and partnerships between business tax and finance departments are critical to effectively addressing these difficulties. This means concentrating on four main areas: developing talent, improving data and technological skills, keeping up with legal and regulatory changes, and allocating resources as efficiently as possible within financial limits.

Tax and finance teams can reduce risks and increase efficiency by retraining employees to be more tech-savvy, investing in technology that simplifies data analysis and reporting, keeping up with regulatory changes, and strategically allocating resources.

Upgrading Tax Departments with Technology

It is imperative that tax departments prioritize improving their technical capabilities in response to the changing landscape of tax management. Many tax professionals now understand that their departments are not as technologically advanced as they could be, which makes it more difficult for them to offer strategic planning and value-added analysis to the C-suite and the finance department.

Tax departments should concentrate on technology investment and provide a clear roadmap for technological growth in order to overcome this issue and create better value for their organizations. The integration of artificial intelligence (AI) applications, robotic process automation (RPA), analytic process automation (APA), and automated data management are some of the phases that this roadmap ought to include.

Tax departments may improve their speed, accuracy, and ability to make strategic decisions by adopting these technological innovations, putting them in a position to prosper in the fast-paced commercial world of today.

The Bottom Line!

There are a lot of advantages for businesses and tax experts alike when using automation and artificial intelligence (AI) technology solutions for corporate tax preparation. These technologies help tax professionals focus on strategic work by automating manual operations and guaranteeing compliance with complicated rules, which increases productivity and accuracy.

Furthermore, combining technology with tax teams' knowledge can improve workplace satisfaction, lower burnout rates, and draw in the most talented employees.