According to a recent Thomson Reuters
poll, consolidating and gathering tax-related data requires the most effort during the compliance process (with 44 percent of respondents indicating as such). Other areas of focus for tax departments include:
- Preparation of tax returns at 15 percent
- Error detection and corrections at 16 percent
- Reconciliation with statutory accounts at 6 percent
- Audit support at 19 percent
The news comes at the heels of a recent AICPA and CIMA survey that revealed that a third of global finance professionals believe that their company has suffered significant revenue hits because of incorrect data analysis.
"It is not surprising that data gathering requires so much effort for tax departments around the world," said Eric Ruud, managing director, Thomson Reuters ONESOURCE Indirect & Property Tax. "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 world's most sophisticated and widely embraced enterprise resource planning (ERP) systems continue to use desktop spreadsheets to manage their value-added tax (VAT) and statistical filing processes (for more on this topic, see: "The Advantages of Automating VAT Determination and Compliance
"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. In 2014 and beyond, consolidating systems and reducing manual processes to increase data accuracy will be critical for global companies," added Ruud.
The poll was conducted last month at the annual Thomson Reuters SYNERGY Conference, where more than 1300 tax leaders from Global 2000 firms discussed key tax compliance challenges and opportunities. Additional findings from the survey of 80 executives with specific responsibilities for sales, use and VAT compliance found:
- More than half (55 percent) of the respondents still store data in multiple ERP systems.
- More than half of respondents (58 percent) are spending more time on manual preparation compared to tax strategy and planning.
- Only 31 percent have moved from ERP systems to specialized solutions to ensure compliance with VAT filing requirements and deadlines.
- 75.9 percent of indirect tax executives have seen an increase in activity by tax authorities in the last two years.
- Despite complex indirect tax requirements, 80 percent of businesses continue to expand new product offerings.
To address the increased focus on indirect tax and respond quickly and accurately to the big data phenomena and increased audit activity, a growing list of Thomson Reuters' clients have licensed the ONESOURCE Indirect Tax application to consolidate their sales and use tax and VAT operations. For more information on ONESOURCE Indirect Tax, visit: http://onesourceindirecttax.com .
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