Tax & IT: How a Unified Compliance Vision Streamlines Digital Transformation

Sovos
February 17, 2020

 

 

What’s your digital transformation strategy? Whether you’re in IT, finance, tax or the executive suite, if that strategy doesn’t include tax, you may be overlooking a huge source of risk – and strategic benefit. It’s time to consider launching a conversation about tax in a digitally transforming world. Which is why we’ve created the “Yes, Tax” conversation guide to help tax and IT navigate this journey together. 


If you work in the finance or tax departments, you’re probably aware that the stakes for your IT colleagues couldn’t be higher when it comes to digital transformation. The roadmap for transformation can extend to five years or longer, with hundreds of applications affected. IT professionals engulfed in shifting timelines and budgets can be forgiven for not being fully updated on every element of global tax compliance that may be on your mind.

So, where is the common ground to build a unified vision for tax – and why do you need one? In the past few years, tax authorities have launched their own digital transformation. More governments are inserting themselves into every transaction a business makes and changing the requirements whenever they see the potential for more revenue.

The problem for many companies is that the disparate applications and ERP implementations that comprise their finance capability cannot keep up with trends in continuous tax compliance regulations. In the midst of this chaotic and heterogeneous data environment is precisely where finance, tax and IT can work together to define a unified vision based on moving tax compliance to the cloud, and doing so as a prerequisite to finance modernization (such as SAP Central Finance), not as an afterthought.

Here are some conversation starters you can use to launch a discussion with finance or IT colleagues around this important issue.

Q.   Is centralizing finances enough to move us forward?
A.   It’s critical, but it won’t be successful unless we centralize tax compliance, as well.

Detail: Constantly changing tax rules and deadlines on sales taxes, gross receipts taxes, excise taxes, value-added tax (VAT), shipping taxes and taxes on profits mean that it’s nearly impossible to maintain an accurate, up-to-date picture of compliance requirements in one country, much less the dozens of countries in which multinational companies may operate. Global companies could be working in many unique jurisdictions with a variety of laws and requirements. Tax determination processes, then, need to move from largely being after-the-fact validation tools to critical instruments to catch and correct errors as they are processed in transactional software. And that’s something finance can’t do without IT’s help, especially as new capabilities such as process automation are called for.

Q.   What are the consequences of non-centralized tax compliance?
A.    Every day they get more significant, and they’re different for every country.

Detail: Failure to proactively comply with tax mandates in a real-time digital environment leads to far more than a few fines. You could face costly audits, financial penalties, supply chain disruptions, decreased cash flow and damaged relationships with suppliers and customers. Under Mexico’s e-invoicing mandate, for example, non-compliance can effectively shut your business down and pull resources away from other projects as you scramble for quick-fix solutions to get up and running again.

Q.    What are the benefits of a cloud-based tax compliance solution?
A.     In two words, automation and control. Specifically, accurate automation of compliance and regulatory updates, so you don’t have to track them manually.

Detail:  You’ll also avoid the surprise of custom code running in a regional office that becomes an unforeseen speed bump to an ERP cloud migration or other critical IT project. Realize savings in maintenance, infrastructure and personnel, while your partner manages the tax compliance software in the cloud and your company doesn’t need to manually intervene every time regulations change. As an added bonus to IT, since you run from a single source of regulatory truth, tax teams can find data easily without burdening IT with help tickets.

Take Action

Get more information on the benefits of including tax in your digital transformation in the next blog post of the Sovos “Yes, Tax” series.

If you’re looking to have an informed conversation about modern digital tax, it pays to know what the experts think. Check out these resources from Sovos and share them with your colleagues:

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Author

Sovos

Sovos is a global provider of tax, compliance and trust solutions and services that enable businesses to navigate an increasingly regulated world with true confidence. Purpose-built for always-on compliance capabilities, our scalable IT-driven solutions meet the demands of an evolving and complex global regulatory landscape. Sovos’ cloud-based software platform provides an unparalleled level of integration with business applications and government compliance processes. More than 100,000 customers in 100+ countries – including half the Fortune 500 – trust Sovos for their compliance needs. Sovos annually processes more than three billion transactions across 19,000 global tax jurisdictions. Bolstered by a robust partner program more than 400 strong, Sovos brings to bear an unrivaled global network for companies across industries and geographies. Founded in 1979, Sovos has operations across the Americas and Europe, and is owned by Hg and TA Associates.
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