Cloud technology aids the corporate tax function

Tax departments are often forgotten as a big data consumer. To get a sense of what large companies deal with, just take a minute to reflect on your personal tax return. You need all your data organized and collated in a timely fashion, prior-year returns to do year-over-year line-item level comparisons and review filing activity for more than one person.

Multiply that by a magnitude of 100 for a corporation and you get a sense of what it’s like to file for a single business entity. Keep in mind, most corporations have several tens if not hundreds of filing entities and far more complex business tax filings than the average individual that spans several local, state and international jurisdictions. 

Root cause of tax data challenge

A common challenge that most tax functions experience is caused by the variety and volume of tax data that is externally sourced for tax determinations. This happens because the source for data needed by tax is generated from other parts of the organization (finance, HR, legal, etc.) and the data as such is not able to be transformed specifically for tax purposes. This is where completeness and quality of data become a concern for tax preparers. Additionally, ever-changing tax regulations that cause the speed, frequency and level of detail in the tax data being requested of taxpayers to increase only exacerbates the importance of timeliness of tax data.  

So how do tax functions go about solving this need? 

Increasingly, tax functions are turning to the cloud to help with many of their data-processing needs. Cloud technologies enable companies to bring their data, systems and processes together across the enterprise. 

It’s not just the tax department but CFOs who have taken a keen interest in this issue as cloud enablement for tax is seen both as a strategic value driver and an opportunity to cut costs. A 2022 EY US LLP Tax Technology Transformation practice survey conducted for companies with $10 billion in revenue highlighted that 46% of tax functions have four to five ERP systems. The same survey also revealed 95% of CFOs expect their tax personnel will need to augment their tax technical skills with data, process and technology skills in the next three years. 

Leveraging cloud technologies

Cloud technologies solve the issue of data living in disparate sources. They achieve this by extracting and transforming data once — rather than several times by several people across the enterprise — while also making the needed data available to users for specific tax and compliance purposes. Several cloud technologies pull general ledger and tax software data from disparate sources and harmonize them, so tax is able to consume a single set of “tax sensitized” data to action upon. 

Cloud technologies offer capabilities that enable you to optimize the flow of data to the appropriate target destination for processing, transforming and allowing for automated visual transformation of data at scale. Once the flow of data has been configured, standard extract, transform and load operations happen seamlessly, with little to no manual intervention. 

If we take the example of a digitized tax workpaper shown above, what would have taken weeks, if not in some cases months, to create leveraging traditional spreadsheets now takes mere days to design and implement leveraging cloud technologies.

Having data centrally unified via a cloud-based architecture facilitates organic integration between systems that saves time, creates value and minimizes administrative burden for tax functions. Many cloud technologies offer simplistic data connectors and integrated security, making them seamless for use across multiple parties and stakeholders within the organization throughout the year.  These enable the delivery of analytics and let you focus on strategic and impactful areas.