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Emerging technologies in tax compliance

  • By Niraj Hutheesing for 'The Times of India'
  • July 21, 2022
  • 2 minutes read
Reading Time: 2 minutes

Businesses are rapidly moving towards connected and smart systems to unlock greater value for themselves and their customers. The Tax function is no different. When I speak to business leaders, government organizations and our global partners, it becomes clear that the tax world is being increasingly driven by technologies such as Data & Analytics, Artificial Intelligence & Machine Learning, Blockchain, among others. These technologies have already found some application but have capabilities to transform the entire tax function by improving operating efficiency, driving fact-based decision making and ultimately changing the value tax brings to the company’s bottom line. 

I see these technologies making inroads in day-to-day operations in businesses across countries. One of our Fortune 500 client mentioned about how they applied RPA routines to data extraction and reconciliation that are repetitive and administrative, a target-rich environment for RPA. As a result, the routines were simplified, made efficient and organization achieved breakeven in the very first year.

The use of RPA applications in conjunction with data analytics and visualization tools can provide a summary of items processed and bring out anomalies. The use of Big Data tools such as interactive tables and charts can transform large volumes of disparate structured and unstructured data in to well-designed, big data enabled visualizations that present the insights effectively and enables interaction with the data like never before. I see the time that is gained by automating routines can be invaluable to shift focus towards analyzing the data for insights and opportunities to refine processes and prevent tax exposures.

RPA, analytics, and big data are just few such areas where technology has proved its potential for the tax teams. But that is not all. The public perception of the corporates is often governed by how their corporate citizenship is perceived. The fine balance between prevention of frauds and optimization of the tax structures is one such area where we believe cognitive technologies may have seemingly infinite potential. For example, the algorithms can identify relevant data points from thousands of transactions to help surface potential inefficiencies, exposures and non-compliances that plague many tax compliance systems. As more transactions are fed into the cognitive system and more tax determinations are corrected, the repeatable pattern emerges, and the system becomes efficient in its ability to review the data and make decisions.

Besides, although in a formative stage, I am excited that blockchain technology can also have a wide impact on taxation. Total trust in the integrity of the system could radically simplify tax compliance and administration, establishing trust between taxpayers and tax administration. 

It is only a matter of time before we start seeing more apparent use of these technologies across large and small organizations for compliances, analysis, and optimizations, as well as by tax enforcements agencies to stimulate data and plug revenue leakages.

Article first appeared on The Times of India

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