Across the globe, organizations are witnessing enhanced tax regulatory norms and requirements that make conducting business complicated. Such tax regulatory norms are set to become even more stringent in the near future. A simple reason for this is the widespread and rampant tax frauds that are being committed.
With such continuous scrutiny and intervention from regulators, it becomes imperative that organizations manage their tax compliances in an effective manner. The reasons for having a robust tax compliance management are many, key ones being:
- Organizations run a huge risk in case their compliances are not in order. This covers reputational risk, financial costs, and in some cases even a threat of a complete shutdown.
- Being non-compliant in one part of the world can make the organizations lose their impact in the other parts of the world as well. This is because the boundaries have disappeared as far as businesses are concerned.
- Non-compliance can impact stakeholders adversely, not only in terms of the value of their investments but also in many other ways. Therefore, stakeholders whether it is talent or shareholders, like to be associated with organizations that are on top of their compliances.
With having established the importance of tax compliances, let’s now understand how compliance management can be done proactively. Following are certain important steps that businesses need to take to begin their journey towards effective compliance management:
- Being compliant should not be viewed as a burden or an obligation by the top management. Compliances should be considered as an opportunity to enhance operational efficiencies and improve output. If such message is trickled down, the organization would be able to build a culture where compliances are given due importance.
- Often tax teams are laden with so many compliances that the process becomes mundane and mechanical. The objective remains to fulfill due dates and move on to the next one. The focal point of identifying gaps and opportunities is left out in the process. Therefore, organizations need to equip tax teams with requisite technology and assistance so that they can focus on strategic decisions which are based on compliances.
- Technology would play a critical role in compliance management. Data analytics, machine learning and artificial intelligence would not only smoothen the process of compliances but would also use the compliances to give updates on any gaps or business opportunities that can be tapped upon. Therefore, organizations need to take cognizance of the role of technology in compliance.
Why Managed Services in compliances?
Managed service is the new trend in tax and technology. It permits an organization to outsource or co-source their tax function which includes tax accounting, tax data massaging, tax return filing, and any other tax related activity. Managed services give the in-house tax team a breathing space in terms of focusing on the tactical planning by freeing up their time from regular tax related activities.
As the world is growing smaller and smaller in terms of disappearing boundaries, MNCs must abide by complex regulatory requirements across jurisdictions. Further, increased liabilities in various countries have warranted a shift in the behavior of corporates to adhere to managed services arrangement. Introduction of newer laws and penalties have also contributed to this shift.
The benefits of managed service are many, below are the key ones:
- Cost and time saving for Corporates: With the compliances and other regular tax activities outsourced, the Corporates can reduce the team size and have a lean team leading to cost reduction. The cost of outsourcing or co-sourcing is usually lower than hiring a full-time resource.
- Fresh perspective from professionals: The organizations benefit from having a fresh perspective on their compliances especially from tax experts. Such experts bring their experiences and proven tax related technologies to conduct such compliances.
- Realigned focus: Businesses can realign their focus from regular tax related activities to strategic functions.
The future of tax and technology appears incomplete without managed services. Looking at how swiftly the world is changing; Cygnet Tax Tech’s offers managed compliance services that help businesses in ITC claims, credit risk analysis, GST audits, compliance management, computation & GST return filing, notice management, vendor management and various other compliance-related requirements. If you are ready to embrace tax technology and optimize compliance with our support, contact us today: firstname.lastname@example.org