Overcoming the top 5 indirect tax data challenges

What are the most common data, analytics, and reporting challenges sales and use tax, VAT, and GST professionals face? Continue reading for tips and strategies to address five key challenges related to indirect tax data.

Managing indirect tax data comes with many challenges, and one of the most vexing is reporting. Tracking and reporting on sales and use tax, value-added tax (VAT), and goods and services tax (GST) can be time-consuming, error-prone, and frustrating.

But it doesn’t have to be that way. Efficient indirect tax software can remove data silos, generate reports quickly in a variety of formats, and harness your most valuable asset — your tax data. When you can extract, manipulate, analyze, and report indirect tax data in exactly the way you need it, you can overcome the biggest hurdles in indirect tax reporting. 

Do you consider yourself data-driven? Ask these 10 questions to see if you’re making the most of your indirect tax data.

Here are five of the largest indirect tax data and reporting challenges you may face and how to address them.

Data challenge No. 1: I'm locked into standard tax reports

Many sales and use tax, VAT, and GST teams must depend on generic reporting formats that are not customized to meet their specific needs. In this case, one size does not fit all. Even customers in the same location or industry may have different ways they need to look at their data.

When standardized, generic reports can’t meet the needs of your indirect tax team, you’re left with limited — and often painful — options. You might go to your IT department and ask for help, which can be time-consuming and does not scale. Or you might do a data dump and piece together a custom report yourself, which is also time-consuming and invites errors and aggravation.

This challenge particularly affects the  manufacturing industry. This sector often must filter down to granular levels to parse indirect tax data for manufacturing credits and incentives, something that generic tax reports don’t do.

Tip No. 1. The good news is that software tools can enable a deeper level of reporting customization – right from the application.  With Thomson Reuters ONESOURCE Determination, you draw from all your indirect tax data to build the reports you need.

Data challenge No. 2: Indirect tax reports take too long to run

When you’re processing large volumes of indirect tax data, running reports can take hours — if the report is completed at all. Traditional reporting tools may leave you sitting idle while you wait for your reports, and that’s wasted time costing your company money. Worse, the resulting report may include more data than you need, making the process much more frustrating. 

ONESOURCE includes best-in-class business intelligence tools that allow you to run granular data quickly, complete with sample views and summaries. With a sample view, you can see what the final report will look like before it runs, allowing you to spot problems ahead of time. Summary options also accelerate indirect tax data interpretation, even if the finalized report is not complete. In high-volume businesses such as retail and e-commerce, these tools are a significant advantage.

ONESOURCE’s reporting architecture is designed to provide full access to all your indirect tax reporting data, without affecting the speed and efficiency of the engine’s tax determination processing power.

Tip No 2. Remember, it’s your data. Your tax technology should provide tools and functionality that make it easy to create and run the reports you need — on your time.

Data challenge No. 3: I have more indirect tax data than my system can handle

One common challenge for indirect tax teams is having too much data and no way to make sense of it. With so much data to manage, companies will often organize it into silos. While this practice can help keep data under control, it presents problems. You need all your data to be in the same place to generate the full range of reports you need. When your indirect tax data is chopped up, you may have to run and collate four or five different reports to get the insight you need.

High volumes of indirect tax data can overwhelm technology tools, many of which simply aren’t powerful enough to deal with that much data. This issue can be a particular concern for e-commerce retailers, who often deal with extremely high transaction counts. They might be making millions of transactions per month and need to see their monthly data summarized by product and state, county, and city. This requires a massive report — hundreds of thousands of lines — that must be carefully organized with multiple layers of data and the ability to drill down to see granular data, such as state, county, and cities within that state.

With ONESOURCE Determination, you can get this kind of organization and detail. Tax teams can use ONESOURCE’s reporting tool to handle large indirect tax data volumes and get the transactional data they need.

Tip No. 3. Your indirect tax software must be able to handle all your data to generate accurate, actionable reports.

Data challenge No. 4: It’s difficult to perform ad hoc analysis

Indirect tax teams may receive requests for ad hoc analysis for various reasons, the most pressing of which is to respond to audits. The information that auditors request is usually specific, and tax teams must be agile enough to respond quickly with accurate reporting. This responsiveness means manipulating indirect tax data easily and sampling the final report before running it to ensure that it delivers the accurate result you need. 

Check out these four ways you can use indirect tax data analytics to prepare for tax audits, respond to customer inquiries, identify tax credits, and monitor nexus thresholds.

ONESOURCE allows you to access and filter the required indirect tax data so it can be presented in a way that meets the auditors’ expectations. You can do this easily by using drag-and-drop tools and performing calculations right in the dashboard. ONESOURCE also enables tax teams to create sample sets to check the structure before running the whole report so you can craft an initial response to an audit request quickly and accurately.

Tip No. 4. Consider whether your tax analytics software is self-service or not. Does the software provide drag-and-drop and filtering tools that make it easy for you to investigate the indirect tax data yourself, without requiring IT intervention?

Data challenge No. 5: I can't get my indirect tax data out of my application accurately and securely

Many companies are likely to keep their indirect tax data in a data warehouse. With the ONESOURCE Data API, you can systematically populate your data warehouse with your indirect tax reporting data from ONESOURCE. Occasionally you may need to populate data into another system, such as a customer relationship management (CRM) system. Our flexible ONESOURCE Data API can support updates to a variety of applications.

Without the right tools, this can be a multistep process that is apt to introduce errors and security risks — especially if your process involves manual tasks. Without a robust reporting and analytics software solution, you may struggle with indirect tax data access issues that not only slow you down but expose you to compliance risk.

Tip No. 5. Using a programmatic way to access indirect tax data, like with  ONESOURCE APIs, provides security. Additionally, using an API means you can set any level of security through authentication, secret keys, and tokens.

Getting the indirect tax data you need — in the way you need it

Indirect tax professionals need accessible and robust indirect tax reporting capabilities. You must be able to deliver tailored reports that bring greater value to the business — without the help of your IT department.

After all, your data is yours. You should be able to use it in a way that’s most useful to you. If you’re sharing your data, you need confidence in that data and your ability to access it.

ONESOURCE global tax determination software gives you tools and access to your indirect tax data in ways that work for you — from standard and build-your-own reports to summary and detail reports, plus a data API for customizable control. These flexible tools allow you to ask whatever question you want, find the answer, and filter down to all the tax details you need.

Learn more about how to use your indirect tax data for faster analytics and reporting.