In this environment, companies, and especially their tax and finance functions, need to know what information they are expected to share and have confidence that it is accurate, secure and formatted correctly.
Data is the foundation upon which this new digital tax world is being built, and the quality of the outcomes that result will depend on the quality of the data that goes in. To match what governments are doing and stay one step ahead, tax departments must look at the tax function through the lens of big data and data analytics.
How tax authorities are using data analytics
Many tax authorities pull together data from a variety of sources to develop a more complete picture of companies’ tax profiles. Companies are increasingly being asked to submit client invoices, statements of accounts, customs declarations, vendor invoices and bank records, all in formats specified by the government — and on an accelerated schedule (often in real or near-real time).
Moreover, the formats in which these data are submitted may differ from how companies track and collect the data themselves.
Tax authorities are using real-time or near real-time data analytics engines to validate invoices and lag discrepancies, verify sales and purchase declarations, verify payroll and withholding declarations and compare data across jurisdictions and taxpayers. Based on these analyses, tax authorities make determinations, including tax and audit assessments.