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Thomson Reuters’ 2019 European Tax Technology Survey shows that most senior executives expect to see a massive increase in investment in technology dedicated to their tax needs.
As reported by Pam Sweet for Accountancy Daily, the study, which spoke to 438 tax teams across Europe, determined that “76% of senior tax executives have seen an increasing focus on tax compliance and planning at board level, while virtually all respondents (98%) plan to invest in tax technology over the next 12 months, compared with only 54% in 2018.”
Close to a third (28%) of the participants plan to boost investment in tax technology by more than 10% as a result of new regulations on digital tax reporting and other compliance requirements.
According to the Thomson Reuters survey, companies are showing growing interest in big data analytics (60%), blockchain (39%, up from 16% a year ago), artificial intelligence (50%) and robotic process automation (56%).
Steve Smith, who works with corporates at Thomson Reuters, said, “This interest in new technologies indicates that tax departments are recognising that the deployment of tax technology can help increase efficiencies, reduce human error and deliver a consistent and manageable way of addressing these new tax regulations.”
Smith added: “Compliance is in the midst of a revolution, and looking forward we can expect to see more regulatory attention to the process and governance rather than the end number. In a digital world the tax authorities will easily be able to validate the output. Tax teams need to prepare for this shift now.”
When it comes to the main challenges faced by tax departments, managing compliance across different jurisdictions and keeping up with new regulations and processes came in first and second with 42 and 36%, respectively.
As shown by the Thomson Reuters survey, “Managing compliance across multiple jurisdictions has become the biggest challenge, driven not least by increased requirements stemming from the BEPS Action Plan.”
However, “Increased scrutiny from tax authorities” made the biggest jump from 2018, landing in fourth place, confirming that “transparency will require a higher degree of data management and real-time analysis, which is hard to deliver without the appropriate systems and processes in place.”
Companies Providing Less Detailed Tax Information in 2019
Interestingly enough, the survey found that companies are not being required by their tax authorities to submit more data despite increasing compliance requirements.
Accountancy Daily’s Pam Sweet suggests, “the number of respondents reporting that they are being asked to provide more detailed information to support tax filings has fallen from 52% in 2018 to 32% in 2019.”
Pundits believe this has occurred as tax authorities in different countries have effectively introduced the OECD’s standard audit file for tax (SAF-T) and have started receiving more comprehensive information from corporations filing their taxes.
Thomson Reuters’ Smith said, ‘There’s clear evidence from Poland and Spain that implementing new digital and near real-time reporting obligations yields significant return in tax revenue.”
“It’s inevitable we will see more and more jurisdictions following suit in the coming years, and multi-national corporations need to be prepared to address these requirements with future-proofed technology solutions.”
“Furthermore, the report indicates that many tax departments are looking to centralise and manage compliance across multiple jurisdictions in response to the continued globalisation and digitalisation of tax,” Smith concluded.
Is your practice ready to embrace technology? Let us know what you think below!
All graphics included in this article are credited to Thomson Reuters 2019 European Tax Technology Survey.
You can download the full version of the survey HERE.