Data accuracy and quality are critical elements for every business, as key operational, financial, personnel and innovation decisions are made based on available information. Poor data quality can easily impact a business negatively in multiple ways. According to research by Gartner, poor data quality costs businesses an average of $9.7 million per year. This is in line with a comprehensive study by Experian, which found that 77% of companies believe that their bottom line is affected by poor data. When these data errors impact a business’ taxes, not only can those errors be costly, but they can become a major liability for the company’s compliance and risk. The issue of data quality is widespread as one report found that more than half of all UK small businesses (51%) have made mistakes when filing their VAT returns, often resulting in these businesses paying more tax to HMRC than necessary.
The digitalisation of tax is expected to play an important role in improving data quality and driving compliance. According to a survey by Forbes, finance and IT executives believe digital tax administration gives authorities more visibility into businesses’ operations, including transfer pricing activity between subsidiaries, and will lead to more sophisticated tax audits. 87% of executives expect digital tax reporting to have a dramatic impact on their industry.
At the recent Tax Transformation Summit in London, tax professionals from the world’s leading brands came together to discuss today’s hottest topics in the tax function: transparency, transformation and technology. Remco Dewaerheijt, VP Tax & Product Strategy for VATBox, led a panel of industry experts in a discussion about how to ensure data quality and maintain compliance at a time when authorities are requiring near real-time reporting, which may be beyond the capabilities and budgets of some companies.
Jose-Manuel Pedron-Garcia, Global Tax Compliance Process Leader at Michelin, emphasises that producing the transactional data required for tax reporting and compliance represents a challenge for multi-national corporations, where enterprise resource planning (ERP) systems cannot always keep up with changing tax requirements.
“The speed that the authorities move to make changes and the tools that they have are far away from the possibilities that many companies have, as well as far beyond the budget that many companies have for making those changes.”
Mr Pedron-Garcia explains that multi-national companies are working on finding solutions to ensure end-to-end quality of their data – from ensuring the accuracy of the original data, finding tools to consolidate the data effectively, and communicating the right data to the authorities. In the meantime, he clarifies that his company maintains open lines of communication with the tax authorities to ensure there is an address when there are inevitable mistakes or issues.
Ksenija Cipek*, Head of Tax Risk Analysis at the Croatian Tax Authority’s Ministry of Finance, agrees and further stresses that transparency is needed on both sides with companies doing their best to comply and authorities supporting them with open communication.
One effective tool that has been proven in ensuring data quality and maintaining compliance is VATBox. To learn more about how VATBox’s innovative platform empowers financial professionals to make strategic decisions based on their transactional data while ensuring unrivalled compliance and savings, click here.
To learn more about how VATBox empowers financial professionals to make strategic decisions based on their transactional data while ensuring unrivalled compliance and savings, contact us.
To watch the full Tax Transformation interview series Click HERE
*Views expressed are personal and do not necessarily reflect the position of the Croatian Tax Authority’s Ministry of Finance