For businesses to become more effective, tax automation must be used
The greatest approach for tax departments to increase productivity and lower compliance concerns, according to experts, is through technology and automation technologies.
Experts advise businesses to concentrate on new technology so that tax departments can handle the increasing demands of tax compliance, especially in light of the regulations governing digital tax reporting.
At the pharmaceutical business Lupin India in Mumbai, Mohan Nusetti, senior vice president and head of indirect tax, says tax teams are under increasing pressure to increase operational effectiveness and reduce risks.
According to Nusetti, "tax authorities are demanding data that is more and more current—sometimes even real-time."
According to him, businesses are increasingly using off-the-shelf technological solutions to meet e-invoicing and statutory tax compliance needs.
According to Gorka Echevarria, worldwide VAT leader at Geneva-based Lexmark, a manufacturer of laser printers, businesses must invest in technology if they hope to comply with regulatory requirements.
"During audits, if they [businesses] show authorities they are serious about upgrading their compliance game with powerful tools, they’ll be able to see the investments pay off," adds Echevarria.
He claims that organizations that employ automation in their operations to strengthen their tax controls are more trusted by tax authorities and auditors. As automated solutions become the standard, this is not likely to alter in the future.
There are many of technological options available on the market for tax directors. However, choosing the appropriate tools for their businesses is where the true difficulty resides.
When investing in technology, multinational corporations typically have to choose between two tactics.
On the one hand, taxpayers may make an investment in a general fix that would apply to all of their enterprises. An ERP system or a tax engine, such as tax computation software, may fall under this category.
On the other hand, international corporations may decide to delegate automation choices to groups in certain countries that are often well-versed in the relevant standards.
According to Echevarria, tax engines can make managing the VAT computation easier, especially for accounts payable processes. By doing this, teams in charge are relieved of the tedious task of manually assigning tax codes to vendor bills.
According to Echevarria, "Tax engines offer a more reliable and solid way to push VAT rate changes that don’t require multiplying tax codes every time rates move up or down."
In the US, where businesses have discovered them to be vital, these tools have also proven to be particularly well-liked.
"Managing indirect tax calculations in the US is mission impossible without such tools [tax engines]," claims Echevarria.
He claims that despite the tools' shown value, some companies are hesitant to introduce them in regions of Europe, the Middle East, and Africa because of the potential financial consequences. Later on though, they quickly realize the chance they missed.
One program that his company employs has emerged as a well-liked solution for transaction-level reporting requirements, according to a tax head at a multinational luxury products company in London.
The tax leader claims that "It includes all the controls to make it a reliable one-stop-shop [solution]."
In addition to tax engines, businesses do have additional automation choices. Utilizing ERP system add-ons