The transformative power of tax automation
Case Study: How one company automated 80% of its tax compliance processes
Companies around the world are feeling ever-growing pressure to control costs, improve efficiency and meet demands by tax authorities for greater data transparency. For one company, that challenge was especially difficult. Operating across more than 100 countries with different tax regimes, it relied on a complex mix of data gathering methods, in-house tax professionals and outsourced services.
So the company set an ambitious goal: automating 80% of its tax compliance processes globally. Working with our tax technology experts, it was able to achieve quick wins over 12 months, reaping many benefits along the way including significant cost savings, better efficiency, greater accuracy and the ability to make more insightful, strategic and data-driven decisions for the business.
The challenge: Dramatically cut time and effort spent on data tasks
This global business knew that automation offered a way to considerably reduce the time and effort its tax professionals spent on data entry, processing, validation and extraction. Our research finds that these processes can account for as much as 60% of the time spent on tax compliance, while another 10% is spent on internal administration – leaving minimal time for preparation, review and risk management.
With its 80% automation goal, the company aimed to free up its tax team’s time for more strategic, value-adding work. And by improving how it managed tax data, it also sought to gain better insights to optimise decision making.
Working with PwC, the company embarked on a multi-year programme to phase in those improvements globally.
“A lack of easily accessible data will inevitably lead to a greater reliance on manual time and resource, which increases both the risk of misstatement and time spent on preparing analyses. Research we have conducted indicates that the extraction, cleansing and analysis of information alone can take up to 60% of the whole compliance process.”
The approach: Wins over 12 months through standardisation and reduced complexity
We began with an initial design phase that focused on transforming tax processes in one or two pilot countries. We then worked with the company to identify areas where improvements could produce quick wins and made plans to implement change in stages.
With data extraction and data validation accounting for the bulk of time occupying the company’s tax professionals, our teams worked collaboratively to identify ways to eliminate complexity and standardise tax processes globally. We also focused on developing ways to use existing systems more effectively – for example, by ensuring that data was gathered and stored in the appropriate formats required for tax compliance.
The solution was also designed to support integration with multiple vendors. This ensured that it could be implemented across the organisation’s different global locations, whatever technologies those sites were currently using.
After the company established which regions to prioritise for each stage of the programme, we began rolling out the newly automated tax data processes one country at a time. These decisions were based on the risk and materiality for each region. Markets in Europe were tackled first because they offered the greatest opportunities to re-use data rules, as many countries had broadly similar requirements.
The impact: New insights for customer service and sales
By automating the data collection and analysis process for tax compliance, the company was able to improve the efficiency and speed at which it extracted and cleansed information needed for tax analysis. It was then able to automatically direct that information to the appropriate tax treatment using allocation rules. This saved time and freed tax teams from the labour-intensive need to manually analyse spreadsheets on an ad hoc basis over months to a process which could be run in minutes, in real time.
The new system embedded existing business knowledge and intelligence and codified tax decision making, ensuring that future teams would be able to work in equally insightful and standardised ways. And the automated system improved transparency of the company’s tax data by increasing controls and audit trail options.
As the company proceeded through its phased rollout, it gradually approached – and then achieved – its 80% tax process automation goal. This transformation has enabled the organisation to gain speed, efficiency and insight benefits across all of its global locations.
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