Don't Fight the Inevitable: Tax Technology Planning
For many businesses, tax compliance has traditionally been a reactive exercise – scrambling to comply with new regulations just before the deadline hits. This firefighting approach is not only stressful but also inefficient. However, there’s a solution: proactive tax technology planning. By anticipating changes and implementing solutions in advance, businesses can achieve smoother transitions and ensure long-term compliance success.
This article is based on our recent webinar, “How to Navigate E-invoicing Postponements”, hosted by Comarch and featuring PwC. Dive in to discover expert insights from industry specialists Ellen Cortvriend (Partner – Leader PwC Center of Excellence on e-invoicing and e-reporting), Rafał Trojanowski (Head of Legal Compliance at Comarch) and Katya Kancheva (Business Solution Manager at Comarch).
The Problem: Firefighting vs. Planning
The world of tax compliance is in a constant state of flux. New regulations, particularly those related to e-invoicing and real-time reporting, are being implemented at an increasing pace. Keeping up with these timelines can be a real nightmare for businesses.
The temptation might be to adopt a reactive approach, scrambling to meet deadlines as they approach. However, this firefighting mentality can have a number of negative consequences.
- Resource strain: Reacting to constant changes puts a significant strain on internal resources. IT teams and tax departments are forced to constantly re-prioritize tasks, leading to burnout and decreased productivity.
- Missed deadlines: With tight deadlines and limited preparation time, the risk of missing compliance deadlines becomes significantly higher. This can result in penalties, fines, and reputational damage.
- Operational disruptions: Implementing new tax technologies on short notice often leads to disruptions in core business processes. This can cause confusion and delays and ultimately impact customer satisfaction.
By taking a proactive approach to tax technology planning, businesses can avoid these pitfalls and ensure a smoother transition to new regulations.
By taking a proactive approach to tax technology planning, businesses can avoid these pitfalls and ensure a smoother transition to new regulations.
Solutions for Smoother Implementation
Early estimation and resource planning
The key to avoiding the last-minute scramble is to plan ahead. Involving external partners with experience in implementing tax technologies can be invaluable. Partners such as Comarch have a deep understanding of the regulatory landscape and can provide more accurate estimations of project timelines.
With a clearer picture, businesses can proactively identify potential resource needs well in advance. This allows for the allocation of the right people and skillsets to the project at the appropriate time.
Preparation and workload management
Don't wait until the deadline looms to begin implementation. Several pre-implementation activities can be undertaken to streamline the process and distribute the workload more evenly. These activities include:
- System landscape assessment: Evaluating your existing IT infrastructure allows you to identify any gaps or limitations that might hinder the integration of new tax technologies.
- Data mapping: This process involves identifying and organizing your existing tax data to ensure seamless compatibility with the new system.
Leveraging pilot programs and voluntary periods
Many countries offer pilot programs or voluntary periods for new tax regulations. These programs provide a valuable opportunity to:
- Test functionality: Businesses can gain hands-on experience with the new technology, identify any potential issues, and refine their implementation strategy.
- Gain insights: Pilot programs offer a chance to observe how other businesses are approaching compliance. This can be a valuable source of insights and best practices.
However, it's important to remember that these programs are not without their complexities. Seeking guidance from external experts during these phases can be crucial, as they can help businesses navigate the specifics of the program and maximize the learning opportunities.
The Shift Towards a Strategic Approach
For many businesses, tax compliance has traditionally been a reactive process. Compliance obligations were often addressed in a piecemeal fashion, with local point solutions implemented for each new regulation. While this approach might have been manageable when tax landscapes were relatively static, it becomes unsustainable in today's rapidly changing environment.
The siloed approach, when different departments or teams operate independently, with limited communication and collaboration, also has its shortcomings:
- Inefficiency: Implementing and maintaining multiple, localized solutions is resource-intensive and inefficient.
- Lack of scalability: As the number of regulations continues to grow, the siloed approach becomes increasingly unsustainable. Businesses struggle to keep pace with the changes and adapt their compliance processes for each new requirement.
In short, the firefighting mentality of reacting to each new regulation is no longer a viable option for businesses operating in the global marketplace.
Turn Fighting Fires into Thought-out Plans
Tax regulations can be daunting for businesses. However, by adopting tax technology planning, they can transform this challenge into an opportunity. A proactive approach to tax technology planning allows companies to ensure they are well-positioned to achieve long-term compliance success.
Consult with Comarch e-invoicing experts for expert guidance in implementing a proactive tax technology plan. By involving a trusted external partner, engaging in pre-implementation activities, and leveraging pilot programs, businesses can ensure a smoother transition to new regulations. Furthermore, establishing a centralized team for monitoring compliance changes and utilizing global tax technology solutions allows for efficient resource allocation, cost savings, and potentially even process optimization.
