Few things are as critical to society as tax compliance, a subject which brings yawns outside of the field of accounting but governs virtually every aspect of modern life. With today’s world rapidly changing as a result of the increased proliferation of digital devices and greater data generation, then, it’s important to remember how tax compliance will be impacted by the so-called “digital revolution” shaking up modern markets.
So how exactly is today’s tech, and data sharing in particular, driving increased tax compliance? What does the future have in store for it, and what should accountants and business leaders alike be doing to prepare themselves? Increasingly, experts are coming around to the idea that data sharing could very well change tax compliance as we know it, and they’re providing proof to back their claims.
Data sharing is changing everything
It’s not just in the tech-industry that the internet of things, big data, and the increased usage of consumer information to make better decisions is reshaping business. The era of data sharing is rapidly generating new, more transparent, and greatly more efficient methods of complying with taxes, and this trend is only likely to continue as tech grows more impressive and ubiquitous.
Today’s digital bookkeeping trends, for instance, mean that companies have greater access to their records than ever before, and are capable of summoning up ancient deals in no time when it comes to ensuring they’re 100% compliant with tax laws. As the role of data in tax compliance has grown, so too have the regulations and guidance surrounding it, meaning CPAs, financiers, and data-gurus alike should all be busying themselves keeping up with new laws as they’re passed if they want to remain successful.
Data sharing is taking over the accounting and tax scene for good reasons; there’s already ample evidence indicating that increased levels of data sharing among companies, governments, and everyday people will yield massive boons long into the future. States all over the country have already said they’re eager to see more data sharing, as it leads to greater numbers of business complying with tax laws and makes tax oversight easier for everyone, from small shop owners to government regulators.
Not everything is figured out, of course; data analytics, data specialist, and the entire era of “big data” itself are still relatively new phenomena, and society will need more time before it figures them out entirely. That’s not stopping industries and government bodies around the world from adopting data sharing practices, however, as modern technology makes it easier than ever before to make more transactions and keep track of them easily.
A necessary result of this, of course, is the evolution of data-standards and new tax regulations alongside of the growth of data sharing. While data sharing is mostly a positive thing, like all technical innovations it will certainly have downsides that companies and governments alike must keep eyes out for as they adopt it with zeal.
A new way to ensure compliance
It’s not just within the United States that data sharing is rapidly growing to become a defining staple of ensuring tax compliance. India, for instance, recently launched a Goods and Services Tax Network, which aims to make sales and financial reporting easier and more transparent for everyone involved. As the benefits of data sharing become more widely known, expect other countries to follow suit.
Sales and use taxes, as well as corporate income taxes, are all frequent headache-generators for tax officials, something with data sharing hopes to change. By embracing more universal and more transparent standards, the tax industry itself will quickly find that data sharing is a way to alleviate many of its past dilemmas while simultaneously boosting the amount of revenue collected.
As transactions become easier to track as they move online in greater numbers, and more users around the world continue to hook into their digitally connected devices, the use of data sharing to enforce tax compliance will only grow with time. Filing requirements will no doubt change as well, and there’s likely a slew of things data sharing will reshape that we’re not even aware of yet.
Ultimately, like in most things, the use of data to ease business operations and increase transparency will prove to be a huge boon to tax collectors and businesses alike. In an increasingly confusing market, dominated by digital trends that come and go each passing day, corporations and governments alike are seeking clarity and stability when it comes to recording, paying, and collecting taxes.
With data sharing, real-time accounting processes will only become more common, revenues will be boosted, and enhanced tax compliance regulations that tackle new, emerging areas will all be sped along. Tax fraud and headaches will always exist, but with the era of data sharing emerging, taxes as a whole are about to become a whole lot easier.
Cost accountant with major focus in SAP/General Fund Enterprise Business System (GFEBS). Also, main functional inspector for accounting/finance audits for internal reviews as well as the Statement of Budgetary Resources audit initiative.