Digitalization of tax calculation and payment process is an initiative to make it easier for individuals and businesses to get their tax right and keep on top of their affairs. It makes tax administration more effective, efficient, and easier for taxpayers through the implementation of a fully digitalized tax system to manage tax affairs efficiently. The various pressures including a growing barrage of regulations, demand for greater transparency, and frequent reporting from regulators are fueling this increasingly tech-savvy workforce. Businesses are demanded to do more with less and are embracing technology to automate operations and reduce manual workload.
Automation in the context of tax is specifically about compliance automation. It facilitates the business to automate the end-to-end process, from the collection and management of financial data through to the creation of computations and e-filing. It is more a matter of looking at the compliance process as a whole, right back to the starting point: the data.
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It is critical to ensure that data can be cleansed and consolidated effectively. That is, data integrity must be preserved by collecting it at the source which typically requires integration with a variety of disparate ERP and accountancy systems. But today much of this data is managed manually by tax professionals by investing their precious time which makes it difficult to use data for analysis due to concerns over the timeliness and the reliability of results. This manual process should be shifted to tax software which uses automated solutions that utilize templates to gather data that will improve the accuracy of data collection.
Tools can be utilized to identify and extract data from multiple systems, locations or entities that are consolidated and stored in a standard format within a data repository, together with details on the full version history and associated audit trails. This data can be analyzed, checking for elements like data order, description inconsistencies, spelling errors and consistent group information.
Once cleansing is over the data repository can be utilized for multiple compliance engines to automatically populate the necessary fields, completely removing the need for transposition. This will reduce the capacity for error or tampering, thereby mitigating financial and reputational risk.
Advantages of Automation
The most immediate benefit of automation is the cost savings associated with advisors. Automation will also give the business more significant control over data. Technology will allow advisors to focus on taking a more strategic role with clients. The time previously devoted to manual data collection will instead be spent on more highly skilled tasks such as tax planning. Skillsets could also well adapt, with a greater emphasis on data analysis leading to more demand for jobs such as the ‘tax technologist.’ Also, automation is attractive to the workforce, as it appeals to the tech-savvy millennials who are less likely to become bored and disillusioned, making it easier to attract and retain skilled staff.