Beyond Regulatory Compliance: Five Key Questions Tax Analytics Can Help Companies Answer.

AuthorCurle, David

Corporate tax departments manage and process large volumes of data, but that data typically is leveraged only in core compliance processes--generating tax filings and returns and accounting for transaction taxes, income taxes, and transfer pricing.

But limiting the use of all that data to the compliance function is a missed opportunity. More and more industries are fine-tuning how they use data to inform everything from everyday tactical marketing decisions to the most mission-critical strategic initiatives. Leaders now speak of building a culture of data-driven decision-making, replacing a longtime reliance on gut feelings, experience, habit, and anecdotes across their organizations.

Recognition of the importance of data in corporate decisions is growing, but there's also a lack of concrete execution. In a recent EY survey, eighty-one percent of respondents agreed that data should be at the heart of decision-making, but only thirty-one percent had significantly restructured their own operations to better enable its use.

The tax function--sitting as it does on top of so much data about a company's processes, finances, and operations--should be in an excellent position to leverage new analytical tools to mine that data to generate insights and predict future outcomes.

Data, combined with the right tools and subject-matter expertise, allows tax practitioners to pivot from a backward-looking perspective (compliance) to a forward-looking, more prescriptive stance. It's a powerful shift from "What have we done?" to "What should we do next?" Making that pivot enhances the value and the profile of the corporate tax function within the organization.

Tax Analytics: What Is It, and How Is It Used?

Tax analytics is nothing more than the use of data to gather insights valuable to the organization and to make predictions about future actions or scenarios. Here are five ways tax analytics can help answer some of the biggest strategic questions facing corporations today:

  1. Visualization and Analytics: What's Our Current Situation?

    Analytics tools can be used to create and design dashboards and other visualizations that enable users to slice data in different ways. For example, one application might give a quick visual overview of the key metrics related to a firm's indirect tax position, updated in real time as new data comes in. Visualizations also can provide easy ways for end users to explore data by drilling down on specific jurisdictions or lines of...

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