The chief digital officer of Microsoft said at a KPMG event that companies need to improve data management to ensure tax departments are much more integrated.
Although tax departments are collaborating more closely with other business units, an industry event heard that the crucial problem of data management can make or break these efforts.
Microsoft's chief digital officer Jacky Wright emphasized the importance of transforming tax departments into value centers while speaking at KPMG's Future of Tax event.
"Back in the day, the tax department was the silo department over there making tax filings. Now what we’re talking about is this evergreen, this changing environment where regulation is trying to keep up with the pace of what is going on in the world," said Wright
It is possible that siloed tax departments are a thing of the past. Companies must take into account how well the tax function is integrated as the world changes.
“With the right data, the world is your oyster relative to how you can stay in front of what you need to do from a tax and a finance perspective,” Wright stated.
Silos around tax and other departments must be avoided, according to Susie Cooke, head of tax transformation services at accounting firm KPMG International in Toronto.
According to Cooke, “reimagining what your tax function looks like requires collaborative work across multiple functions. It needs the help of finance and the IT teams. It really has to be collaborative.”
Tax is one of many industries that are becoming more integrated.
"Tax functions are not known are not known for being the most innovative and exciting groups in the world. Sometimes they need that help and they need that collaboration, they need people to be able to bring that art of the possible to help drive innovation," Cooke stated.
To encourage greater tax integration and data management at the C-suite level, Microsoft and KPMG are working together on the Digital Gateway. This is a direct reaction to the degree of global tax uncertainty that businesses must deal with.
The degree of tax uncertainty that businesses must deal with was highlighted by Greg Engel, vice chair of tax at KPMG in the US.
"Whether it’s preparing for potential changes to US tax policies, implementing the OECD global tax policies, addressing the rising pressure to consider ESG in their total tax stories, or determining how to do more with less, many leaders are struggling with how to prepare and respond," said Engel.
Wright continued, "the relationship with KPMG Tax is in direct response to the tremendous disruptions that companies are being faced with and the need to help them grapple with it"
To give the C-suite a single source of information, Digital Gateway was created. Tax Advance, Data Factory, and Connected Modeling are three of the new applications that are included. These applications draw their data from the ERP system of a specific business.
Despite the size of the tax software market, there is a lot of rivalry.
KPMG has committed $5 billion to accelerating its services' digital transformation. Just the tax and legal technology portion of this cost more than $1 billion. The core of the cloud-based platform is Microsoft Azure and Azure AI.
“We are delivering tested solutions to help every organisation take control of their tax compliance, audit goals, and really focus on accelerating modernisation of tax solutions,” said Wright.
Connected and Data Factory Before Tax Advance, connections between the data are made by modeling process information into visual data. The tax and finance departments might use this to optimize their document management and workflow processes.
The gateway is meant to act as a general database for everyone, not just tax experts. Whether or not they have a background in taxes, KPMG and Microsoft want business leaders to have access to the cloud-based program.
The human component of data management cannot be replaced by technology, though. For a variety of reasons, many tax teams continue to struggle with data. This prevents innovation in tax departments and businesses as a whole.
"How big of an issue is it? It’s a huge issue," Cooke said. "Every client I come across has some problem with the data, whether it’s just not there, it’s just not transparent enough or it wasn’t set up with them in mind."
Most of them are not coping very well with it. It’s a serious struggle. The data is that fundamental, she continued”
According to Cooke, tax teams have been viewed as "the great consolidators" of data, and as a result, many of them have assumed duties that should not be the domain of tax. These issues are structural, so they might not only be resolved by new applications.
By fLEXI tEAM