Big data and bad data are proving to be a big challenge for tax departments at major corporations, according to a new survey that found them spending a disproportionate amount of time consolidating and gathering information, reconciling it, and detecting and correcting errors.
Thomson Reuters found that 44 percent of the 1,300 tax executives that it polled from Global 2000 companies during a recent conference said consolidating and gathering tax-related data requires the most effort during the compliance process. Other areas of intense focus for tax departments include preparation of tax returns, cited by 15 percent of the survey respondents, error detection and correction by 16 percent, reconciliation with statutory accounts by 6 percent and audit support by 19 percent.
“It is not surprising that data gathering requires so much effort for tax departments around the world,” said Eric Ruud, managing director of Thomson Reuters ONESOURCE Indirect & Property Tax, in a statement. “With the advent of big data, many companies have been on a quest to amass as much data as possible making it more challenging for departments to find what they need. In the world of taxes—whether dealing with income, sales, property or international taxes—finding the right data is critical to compliance and avoiding unnecessary tax penalties and costly audits. It’s all about quality, and the data must be both accurate and complete.”
Part of the challenge is that many users of the most advanced and popular enterprise resource planning systems around the world continue to use desktop spreadsheets to manage value-added taxes and statistical filing processes.
“Trying to use ERP alone to tackle complicated VAT and transaction tax compliance greatly increases the time required and complexity of gathering tax-related data,” said Ruud. “In 2014 and beyond, consolidating systems and reducing manual processes to increase data accuracy will be critical for global companies.”
The poll was conducted last month at the annual Thomson Reuters SYNERGY Conference, where more than 1,300 tax leaders from Global 2000 companies discussed their tax compliance challenges and opportunities.
Other survey findings came from a smaller group of 80 executives who have specific responsibilities for sales, use and VAT tax compliance. Fifty-five percent said they still store data in multiple ERP systems, while 58 percent said they spend more time on manual tax preparation compared to tax strategy and planning. Only 31 percent of the smaller group said they have moved from ERP systems to specialized systems to ensure compliance with VAT filing requirements and deadlines.
In addition, 75.9 percent of the smaller group of survey respondents said they have seen an increase in activity by tax authorities in the last two years, but despite the many complex indirect tax requirements, 80 percent of them said their companies continue to expand their new product offerings.
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