Tax Technology: How is it Improving Tax Practices

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Tax Technology: How is it Improving Tax Practices

CFO Tech Outlook | Tuesday, August 10, 2021

Any software, program, platform, or digital tool that facilitates the digitization of tax procedures and improves the job of tax professionals is considered tax technology.

FREMONT, CA : The tax sector is undergoing a transformation: instead of focusing on compliance, it is now focusing on value—ensuring that fair taxes are paid, managing tax risk, evaluating the tax ramifications of company actions, and more. A new dependence on tax technology underpins this change to a more strategic tax practice—and makes it possible. Take a closer look at what tax technology is and how it is improving tax practices.

Any software, program, platform, or digital tool that facilitates the digitization of tax procedures and improves the job of tax professionals is considered tax technology.

Technology for The Tax Function

A wide range of technologies can already be used in current tax procedures, and the number of alternatives is certain to grow as time goes on:

Robotic Process Automation (RPA)

RPA is helpful for many tax activities that are manual, repetitive, and highly logical, as it was designed to automate simple processes. Low-value jobs such as data validation, report preparation, and data entry can be handled by RPA tech solutions rather than humans.

Smart Process Automation (SPA)—Also known as intelligent process automation, SPA combines RPA with machine learning to create a more intelligent automated workflow. Machine learning refers to the ability for computers to 'learn' how to accomplish a task over time, allowing SPA technologies to take over activities such as document classification and asset categorization.

Artificial Intelligence (AI)—Computer systems that can execute human-like tasks are steadily becoming a reality. Although there are few AI solutions for the tax function currently available, this type of tax technology will have superior data analytics capabilities to increase tax teams' effectiveness.

Cloud computing—Many tax departments are also beginning to take advantage of cloud applications; web-based applications that are delivered through the Internet rather than being 'installed on a machine. As organizations become more virtualized, teams will no longer be bound by physical devices and will be able to work from anywhere, at any time.

These types of tax technologies are currently being used in practically every aspect of tax, including tax management and data extraction, document management, returns filing, forecasting, bill-paying, and more.

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