Tax compliance — and the reporting involved in maintaining that compliance — is one of the most stressful tasks a corporate tax team must complete. In addition to filing returns for the federal government, as well as every state and locality in which it does business, a corporation may also be required to report sales and use taxes and much more. The penalties for failing to comply with any of these reporting requirements can include interest and fines, or even the loss of the organization’s ability to do business in the jurisdiction. Tax teams are responsible for making sure the data in every report is complete and accurate — a task that becomes more difficult as the amount of data proliferates.
For each report or result, someone must find, adjust, and make sense of tax data — and then store it for reuse. An ever-changing regulatory environment is also increasing pressure on tax departments to meet strict tax compliance and accuracy standards, on ever-shorter timelines. These tax teams need a centralized repository for managing tax data and calculations that are tailored to optimized tax processes. This gives teams complete control over company tax reporting, and allows them to find the right level of data quickly.
For a corporate tax team, a tax data warehouse can bring relief. Here’s a look at the definition of a tax data warehouse and the benefits it may provide for corporate tax departments.
What is a tax data warehouse?
A tax data warehouse is a specialized repository designed to support the corporate tax reporting and compliance process. It is also known as a tax data hub. Similar to a data warehouse, it consolidates large amounts of tax data from many different sources and stores it in one centralized location. A major benefit is that the tax data is entered only once, and multiple users can access and reuse it for various purposes, including tax data analytics and global tax planning. This makes the tax data stable, accurate and accessible in real time — exactly what your corporate tax team needs to file correctly and on time.
The tax data warehouse also integrates tax data with other tools for tax visualization, data cleansing, manipulation, and more to support tax planning and forecasting. You can think of the tax data hub as a one-stop shop which uses the same data to give total reliability. It replaces the need for your tax department to use multiple systems or disparate spreadsheets for storing tax data, which can result in errors.
A tax data warehouse can pull data from an existing enterprise resource planning (ERP) system, as well as from corporate compliance software, tax provision systems, and other bolt-on systems.
3 top ways in which a tax data warehouse helps with reporting and compliance
A tax data warehouse can be invaluable to corporate tax teams as they face today’s tax challenges. Here are the top three things it can do:
- Save time on tax data collection: The main benefit of a tax data warehouse is that it significantly reduces the time a tax team must spend on collecting tax data from various databases. Data is stored in one centralized data repository that the rest of your organization can access easily. This saves time across a wide variety of tasks in the tax life cycle. No longer do corporate tax professionals have to sift through spreadsheets or unconnected systems for the data they’re seeking, then prepare it for use across different tax planning processes. In a tax data warehouse, tax functions from company tax reporting and planning to tax compliance and audits are automated and streamlined, saving hours of tedious effort.
- Reduce risk of noncompliance: Tax data warehouses allow tax teams to reduce risk because they leverage automation, and a tax data hub removes the inherent risks of manual data entry. They provide data validation, security, transparency, governance, and audit trails. These features are usually built into the tax data warehouse system and make it easier to prove compliance. Whereas spreadsheets lack transparency and version control, especially across dimensions, a tax data warehouse uses automated, no-touch processes to validate data as it is pulled in, for accuracy and usability in downstream processes.
- Provide valuable insight to your business: The automated data collection and seamless connectivity capabilities that underpin the tax data warehouse bring new opportunities to the tax team. Because you can share data with third-party tools, you can carry out high-value tasks, including tax data analytics and scenario planning. The analytic process automation of a tax data hub makes data more easily accessible, streamlining your compliance process so your tax team can spend more time using your tax data to perform high-level analysis and provide valuable insight to your business.
Is a tax data warehouse the right choice for your tax department?
The burden of corporate tax reporting and compliance need not occupy all of your tax or IT team’s time. Discover how a centralized tax data warehouse such as Thomson Reuters Data Hub can reduce the pressure on your team by providing accurate data that is transparent and quickly accessible. With such a tax data platform, team members can get full control over data, save valuable time, and gain confidence about the company’s tax reporting and compliance processes. Data Hub adapts to the operating model of your choice, provides a single source of truth, and reduces the risk of noncompliance. With a centralized tax data warehouse, your tax team can generate meaningful insight and drive value for your organization.
