4 min read

Intelligent tax reporting in financial services

richardclough

Tax Chief Data Officer, Tax Technology & Transformation

Leverage intelligent tax reporting to address global tax reporting requirements in financial services.

The global financial services world is digitalizing very quickly. Institutions are future-proofing their businesses by streamlining and improving resilience with enhanced data and technology capabilities. This speed of change is primarily compounded by three global movements:

  • Political momentum of G7 and G20 on the global minimum tax framework
  • Further global regulations on transfer pricing, CbCR, and OECD BEPS 2.0
  • The progression of technology innovation amongst competitive markets

As a result, financial institutions face several stringent challenges, including new global tax reporting requirements, existing fragmented data acquisition, data cleansing, structuring cost and risk, and inflexible technologies, all of which make the cost of change higher than it should be.

Traditional tax approaches that rely on fragmented data acquisition, manual processes, and spreadsheets are no longer adequate. According to the EY 2020 Global Tax Technology and Transformation Survey, the majority of companies surveyed still spend 40-70% of their tax function time on data cleansing activities.


Case study

Client: Global technology manufacturer, HQ in Asia-Pacific

The challenge: An extensive geographic coverage of 60+ countries and 300+ legal entities, the client had no integration of its tax forecasting, tax provision, transfer pricing adjustments, or tax reporting information. Additionally, the client had outdated tax reporting tools and non-standardized, fragmented tax provision processes.

The approach: EY teams built and helped implement a range of global tax reporting and transfer pricing use cases in the client’s Anaplan instance, using a common Data Hub. EY teams helped accelerate and de-risked execution using a range of in-house templates for global reporting.

The impact: The client achieved a rapid go-live of integrated global tax reporting within months and the financial close is now significantly faster with greater automation. They enjoyed:

  • Cost savings of an estimated $1.5+ million net
  • Automated global upload of SAP trial balances
  • Quarterly reporting, and return-to-provision, which are now integrated with tax compliance processes and data flow for compliance outsourcing

To overcome the challenges associated with traditional approaches to tax, EY teams help clients focus on bringing tax and finance reporting use cases into an enterprise-wide performance management (EPM) approach. Anaplan EPM features enable you to integrate multiple ERPs and source systems and maintain a single source of truth, including:

  • Native capabilities of EPM tools that are leveraged for tax processes
  • Saving on license costs
  • An easy system to customize and maintain when skills and capabilities are already embedded within the finance team
  • Sharing data with finance that eliminates data reconciliation
  • Reduced dependency on spreadsheets
  • Value-added reporting and analysis
  • An integrated tax and finance use case portfolio for reuse of common data
  • Accelerated implementation with EY reporting and calculation templates, covering comprehensive requirements, such as EY templates for global tax reporting, including:
    • Supporting schedules for tax provision calculations
    • Tracking templates (e.g., losses, credits, tax payments, uncertain tax positions)
    • Movement templates (e.g., current tax, deferred tax, valuation allowances)
    • Adjustment templates (e.g., tax accounting summary, summary of adjustments, non-run rate adjustments)

The benefits of intelligent tax reporting are significant and directly respond to the challenges associated with a more traditional approach. Consider these benefits:

  • A common Data Hub improves the speed and agility of reporting processes.
  • Simplification of data acquisition, cleansing, and structuring provide a unified, standardized approach for use cases.
  • Collaboration between the finance and tax functions is enabled by a common tax and finance data model.
  • Cost savings from the centralization of repetitive and manual data preparation work increases automation of the institution’s data operations team.
  • An uplift in tax data quality helps ensure that onshore tax staff have the right data at their fingertips for tax compliance and advisory purposes.
  • Reuse of the tax data across different tax types and regions can be used for compliance and planning purposes.
  • Increased risk management environment and potential reduction in errors and fines or penalties are a result of improved tax data quality.

The EY intelligent tax reporting solution, supported by Anaplan, helps enable EY clients to simplify their tax and finance data management, reducing cost and risk. It also allows clients to manage new global tax reporting requirements with simplicity and speed, and helps accelerate implementation support using ready-to-deploy templates.

Why is now the time for tax functions to look at data management?

The technology available to tax functions continues to rapidly evolve, offering greater possibilities to store, retrieve, process, combine, and interrogate data. Cloud computing and applications that increase the generation and integration of data all play a part. In tax, this digitalization offers speed, efficiency, and simplification gains to compliance processes, and the potential for the function to add more value to the organization it serves by better, data-driven decision-making.

It’s not just the tax functions of corporations that focus on the possibilities of data and digitalization in tax. Tax authorities around the world increasingly request that data be shared electronically and then apply data interrogation techniques to identify potential anomalies. There is a strong compliance imperative for organizations to be proactive with their tax data management of the progression of the digital tax authority.

To find out how the EY intelligent tax reporting solution can simplify your financial institution’s tax management processes, make cost savings, and drive more confident decision-making, join EY and Anaplan at one of the following webinars:

  • Wednesday, 22 September | 9 a.m. BST | 4 p.m. SGT
  • Thursday, 23 September | 4 p.m. BST | 11 p.m. SGT

For more information on intelligent tax reporting, join EY and Anaplan at one of our webinars.

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