Are you making the most of your indirect tax data? 10 questions to ask your tax team
It’s common for corporate tax professionals to hear about the importance of being data-driven. Good data can lead to smarter decisions — not to mention quicker ones, with automation making it possible to do more with less.
As you seek ways to improve your standing in the business, you should examine how tax data plays into your current work and what you may need to change to succeed. Best-in-class indirect tax teams drive value — either in dollars or stakeholder involvement — by minimizing tax impact throughout their organization. Data quality and flexible reporting are key to accomplishing this. Sales and use tax, value-added tax (VAT), and goods and services tax (GST) professionals can immediately add value when they gain more control over their data and use it to unlock key insights that benefit the larger organization, even outside of the tax realm.
Ask yourself these 10 questions about how you and your team are using tax data analytics to bring more value to your business, anticipate and react to changes, and save your company money.
- Do we have a single source of accurate indirect tax data? Tax data can be siloed in multiple places, such as enterprise resource planning (ERP) solutions and e-commerce platforms. The data required to make an accurate tax determination is often lacking at the time of invoice processing or may not be retained for audit purposes. An API can effectively connect data sources and integrate them in a single place. Ideally, a scalable data lake creates that “one source of truth” tax professionals need to run accurate, actionable reports. It’s critical that you’re confident in the quality of your data and reports, so that you can effectively share tax insights with key stakeholders and showcase how the tax department supports the broader organization’s strategic goals.
- Can I give my colleagues the indirect tax reports they need to support our company’s growth? Your internal clients are making business forecasts and investments using projected revenue and spend. As a tax team, you can support these decisions with real-time reporting on projected indirect tax cash flow for treasury and finance purposes. You also can provide insight on how company spend for indirect tax affects local communities and their inhabitants.
- Can I use indirect tax data analytics to help my company see me as a strategic partner? Cloud-based reporting and analytics make it easier and quicker for you to demonstrate to the C-suite how you add value. When the data is always at your fingertips, you can instantly run a report or provide a complete analytical picture when planning and managing tax initiatives. Greater granularity and accuracy may help you find ways to improve cash flow, defer tax, or create credits that were previously unidentifiable by the tax team and others. You can also enhance customer service by answering invoice questions quickly with accurate detail for tax situs, taxability determination, and assessed rate for each of the applicable jurisdictions. All of these actions help you increase the profitability of your organization, deliver a better customer experience, and improve the real and perceived value of the tax department.
- Do I have the indirect tax data to help my organization optimize processes? With the right tools, your team can generate reports on opportunities that minimize tax risk and reduce internal and external customer tax queries. A few examples include tracking the top 20% of vendors by spend or sales tax spend, the top 20% of customers, or tax-exempt sales. By monitoring for upticks and downturns, you can investigate and identify process changes and mitigate risk. Use tracking and reporting tools to demonstrate the impact of your corrective actions and provide proof of your gains.
- Are we using our data to claim all of the tax credits to which our company is entitled? Your indirect tax team should also use data and reporting to make sure you receive any local tax credits your business may be eligible for. One example is Kansas’s High Performance Incentive Program, which entitles businesses that make $50,000 in qualified capital investments to receive investment tax credits. Another is bad debt, a challenging tax process that often gets lost in the shuffle by the time the tax receivable is written off as unpaid. If you’re unable to collect sales tax that you have already remitted, most states will allow you to claim a bad debt deduction as either a credit or deduction on a current sales tax return; however, some states may require refund claims with amended returns. By using transaction data and event details from accounts receivable, bad debt expense, and direct tax returns, these funds could be tracked, computed, and claimed.
- Do I have enough indirect tax data to navigate a changing industry landscape? In the United States, the 2018 South Dakota v. Wayfair Supreme Court ruling introduced the concept of economic nexus and dramatically expanded taxpayer responsibilities for those that are required to collect sales tax on sales of their goods. More recently, tax regulations have changed, especially around food and meals, to capture needed taxes and replenish funds used in COVID-19 relief bills. E-commerce and online retail have created new and challenging demands that require detailed transaction data. This information must be reported and shared several ways between marketplace, vendor-seller, expediter, and customer, in addition to being reported in tax return modules and to taxing jurisdictions. The right software and technology tools can help you stay ahead in a shifting marketplace and respond to tax changes with correct and accurate information.
- Am I using indirect tax reports and data analytics to help my organization prepare for higher taxes and aggressive audits? Around the world, tax agencies are looking to replenish their diminishing coffers. As a result, your indirect tax department should be ready for increased taxation as well as aggressive tax audits. If you have fast, accurate reports available in an instant, the audit process will be much smoother. And with advanced reporting and analytics software, a universal audit indirect tax report can be parsed for any jurisdiction as a standard operating procedure and made available to the auditor in a portal workspace.
- Can I simplify the way our teams work together and access data with cloud-based tax software? Corporations are increasingly embracing hybrid work models, and this trend is likely to last. You can use cloud-based tax software to connect your team, simplify access to interconnected systems, enable digital workflows, and standardize data views. Standard prebuilt reports save time and resources, and shared reports encourage collaboration between tax colleagues.
- Are we making too many manual errors because of tax data siloes? Manual tax processes and spreadsheets can create costly errors that ripple across business processes and are hard to detect. You can avoid these issues and ensure the quality of your work by tapping digital tools to integrate data, make critical computations, and invite others to review your findings.
- As a tax specialist, am I optimizing how I work with data so I can spend my time on the right things? If you’re spending most of your time performing manual tasks with data, then you aren’t delivering the value and tax expertise you have to offer. Manually collecting and reporting data is neither sustainable nor a good use of your skills. When you’re equipped with the right tools and software, you can spend your time discovering tax insights that affect the bottom line and demonstrate your true value. Over time these successes will help you advance in your career and focus on the tax work that’s most meaningful and interesting to you.
Thomson Reuters ONESOURCE Determination helps you navigate the changing landscape and embrace the future of indirect tax
Thomson Reuters® global tax determination software, ONESOURCE Determination, offers next-generation reporting and analytics capabilities for sales and use tax, VAT, and GST professionals. The cloud-based platform allows tax teams to automate routine tax decision-making, freeing up staff to focus on more strategic work. Drag-and-drop functionality makes it easy to model the impact of different variables, so you can choose the options that meet regulatory requirements and drive value for your company. You can build custom, standard, and shared reports to equip your indirect tax team and key stakeholders with the information they need to make critical strategic and operational decisions. And you can stay up-to-date with the changing tax landscape with a solution that continually evolves to address rules and rate changes in more than 56,000+ jurisdictions across 205 countries.
Download our whitepaper to learn more about how to use your indirect tax data for faster analytics and reporting.