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GLOBAL COMPLIANCE REPORT
WHAT TO EXPECT IN TODAY’S CHANGING TAX WORLD
Without question, tax technology is on the rise. If you work in a
corporate tax department, you know this has been the trend for
some time. But 2015 has proven that tax technology is more
prevalent than ever given the tax activity around the world that is
driving complexity and the need for transparency.
According to a recent survey of over 3,000 tax professionals, three-
quarters of respondents stated that they did not have a dedicated
tax technology role in their corporate tax department five years
ago. But, when asked about the importance of tax technology to
the success of their current role, the majority responded that it is
“extremely important.” Further, all responses pointed to a marked increase in the importance of
hiring a tax professional with proficiency in tax technology over the past five years.
The biggest corporate challenges around compliance and reporting? According to the survey,
keeping up with new and evolving regulations, along with the reliability and accuracy of tax
reporting data, top the list when it comes to global compliance and reporting. When we look back
at 2015, we can certainly see why.
3,000Three-quarters of
tax professionals did not have a dedicated
tax technology role five years ago
Keeping up with new and evolving regulations, along with the reliability and accuracy of tax reporting data, top the list when it comes to global compliance and reporting.
GITA SHARMA Sr. Editor in Publishing / Editorial
Taxologist
As a result of this new requirement that involves coordination among payroll, benefits, human resources, and tax reporting functions, organizations have seen increased costs and demands for data management to comply with the necessary information reporting.
2015: A YEAR OF PROFOUND CHANGE
2015 was undoubtedly an eventful year for those of us in the tax world.
In the U.S., the Affordable Care Act (ACA) brought major change for employers as they prepared for the
reporting of 2015 healthcare coverage information to the IRS via Forms 1094 & 1095, learning about detailed
rules and mobilizing data collection efforts.
Globally, the OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan,
which will strengthen international tax rules and strive to end corporate
tax avoidance, was finalized in October 2015 during a meeting of the G20
heads of state in Antalya, Turkey. Numerous countries have already enacted
legislation in accordance with these guidelines— including the U.K., Australia,
Ireland, Italy, Spain, Mexico, the Netherlands, Poland, South Korea and
China—with many more to follow.
Another major concern for corporate tax departments in 2015 was FATCA (Foreign Account Tax
Compliance Act). Initially thought of as a regulation that would impact financial institutions, FATCA
applied to many multinational companies based on their entity structures and financial flows. Further,
the OECD’s Common Reporting Standard (CRS), a FATCA-type framework for electronic exchange
of taxpayer information between countries, was put into place via agreements across dozens of
jurisdictions outside the U.S.
Beyond broad regulations, politicians and leaders continued to look to tax policy as a way to manage
economic ups and downs. Japan, Greece and Argentina were just a few countries that made headlines in
2015 by managing economic woes with tax policy changes.
These new, wide-ranging initiatives are monopolizing the attention of taxpayers everywhere. However,
we also see a picture of growing complexity when we look at the “traditional” compliance obligations.
Tax authorities worldwide are requesting new, specific reports, aside from the regular returns, in order
to help them identify abuse, fraud and evasion. Increasingly, the tax returns, reports and compilations
are submitted to the government tax authorities digitally and in real time, making their accurate
completion critical.
For example, some jurisdictions request that taxpayers segregate all operations conducted with
lower-tax jurisdictions (called “tax-havens”) and report them separately. The authorities will then
compare and contrast all returns and reports, using relational databases, historic filings and artificial
intelligence to analyze patterns and identify anomalies that could reflect unintentional error or malice.
Subsequent assessments could involve risk of penalty, reputation and other losses that cannot be
ignored—and can be avoided with the right tax technology systems in place.
2016 AND BEYOND: ANTICIPATED REPORTING OBLIGATIONS
Tax compliance in 2016 and beyond will only continue to evolve.
In the U.S., employers have entered this year with the ACA’s “play-or-pay”
mandate in full effect, getting set to comply with the new complex reporting
obligations under Code Sections 6055 and 6056.
Globally, BEPS will demand that multinational companies with global
revenues of more than €750 million (or near equivalent in local currency)
implement country-by-country reporting (CbCR) for tax years starting on
or after January 1, 2016 (but with potential varying start dates, such as with
the US-proposed CbCR regulations issued in late 2015), with filing within
12 months from tax year end, which will then be automatically exchanged
among participating jurisdictions where the multinationals have operations.
In addition to tax compliance, companies are also faced with changes and
updates to financial reporting standards. For those groups adopting IFRS,
changes are coming for financial instruments and leases, and the impact
of these will ultimately be reflected in the local GAAP of many countries.
Companies will need to ensure that their financial statements are compliant
with changing standards in the countries where they have to report.
ROBERT SLEDZ Editor, International Tax
Thomson Reuters Taxologist
Without comprehensive tax technology and full control over tax data, multinational corporations cannot comply with BEPS-related regulations, particularly when it comes to country-by-country reporting.
THE CHALLENGE OF DATA MANAGEMENT
For many companies various mergers and legacy systems have made tax data
management a complicated process.
According to the aforementioned survey, over one-quarter (28 percent) of
respondents report their biggest corporate challenge around data management
is disparate systems and data sources. In addition, nearly one-quarter of
respondents report volume and gathering inefficiency as a top challenge and
greater concern than in years past.
However, more than one-half (55 percent) of respondents state they are looking
to improve data collection, data integration and data analysis within the next
year. Workpaper and document management are a high priority as well.
With mounting reporting obligations, corporate tax departments are left
wondering, “Do we have adequate systems in place to comply with these
reporting obligations?”
28 percent
of respondents report their biggest corporate challenge around data
management is disparate systems and data sources
1/4of respondents report
volume and gathering inefficiency as a top challenge and greater
concern than in years past
THE LATEST TRENDS IN TAX TECHNOLOGY
With such fundamental change to the way multinational corporations report tax data to
authorities, remaining compliant is no small task. Fortunately, the latest trends in comprehensive
tax technology center around uniting tax data from disparate sources, keeping corporate tax
departments up-to-date on key pieces of legislation relevant to them, and enabling multinational
companies to stay ahead of various inquiries from taxing authorities.
Have you ever wondered how advertisements related to your recent search
history pop up as you browse the Internet? This is linked data—and it can
provide corporate tax departments with contextually relevant legislative
research, integrated workpapers and connections across tax data that result in
valuable analytics.
Another technology trend supporting tax process efficiency is a focus on a
common experience for users, regardless of device or browser. This improved
user experience will also be felt as technology providers strive to shorten the
learning curve for their offerings through more intuitive interfaces.
IRISH MCINTYRE Vice President, Product Management
Thomson Reuters Taxologist
By implementing comprehensive tax technology, multiple systems can talk to each other, allowing tax departments to collect data the fewest number of times possible, and share it across departmental and geographical lines.
THE ANSWER FOR TOTAL GLOBAL COMPLIANCE AND REPORTING
External factors like regulatory complexity and globalization are always in motion, but tax
technology lays the strong foundation for your tax department. It enables you to be more
accurate and compliant, streamlines your processes, increases your transparency and allows
you to collaborate globally—all better equipping your tax department to
confront today’s challenges head on.
In addition, tax technology frees up time and allows you to shift your team’s
focus to more strategic work, giving you an opportunity to elevate the
profile of tax within your organization and build a sustainable framework
for the future.
The events of the past year prove that the only constant is change. For the
corporate tax department, the best way to address evolving global compliance
and reporting demands is by implementing comprehensive tax technology,
backed by a provider that understands the latest technology trends.
ARE YOU A TAXOLOGIST?
Join over 150,000 tax professionals worldwide who are transforming their tax
processes with ONESOURCE.
Visit ONESOURCE.thomsonreuters.com to learn more about how tax technology
can help you achieve worldwide compliance in 2016 and beyond.
Breaking data down into building blocks enables it to be reconstructed by any application, depending on what information is needed. That is the holy grail of tax technology.
IRISH MCINTYRE Vice President, Product Management
Thomson Reuters Taxologist
Join over 150,000 tax professionals worldwide who are transforming their tax processes with ONESOURCE.
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