Tax administrations are leading digital disruptions, using data analytics as the springboard for the future of tax.
Sophisticated but business-friendly analytic tools allow tax departments to leverage data to manage risks, control costs, identify opportunities and enhance business decisions. At the same time, increasing numbers of tax authorities are using data analytics to mine even more data to help increase tax collections and target compliance initiatives.
“Tax administrations in many countries around the world are leading this digital disruption, creating very sophisticated data analytic platforms, reshaping how tax administrations interact with taxpayers in a big way,” says Carolyn Bailey, EY Digital Tax Administration Leader.
Adds Daren Campbell, EY Americas Tax Technology and Data Analytics Service Leader, “Data analytics has also created unprecedented opportunities for companies to manage risk and gain visibility and actionable insights across their tax operation.”
Daren describes one organization that was managing 350 entitities across 70 countries and generating thousands of spreadsheets, making tax reporting a challenging and time-consuming process.
“We used a data blending tool to transform and consolidate the required information into a data warehouse,” he says. “This not only greatly simplified the tax reporting process and slashed the time required, it also gave the company the capability to deploy analytics to produce rich visualizations that helped find process inefficiencies, identify tax-planning opportunities and manage their tax risk.
“Their analytic capabilities can now keep pace with the rapidly increasing use of data analytics by tax authorities,” Daren says. “Data analytics will change the role of tax from being the historian to a strategic business partner.”
Watch more in our video series on the future of tax