Reimagining tax in a disruptive world

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21 March 2018
By Pauline Lum, Tax Executive Director, PwC Malaysia

Big data, machine learning and real time artificial intelligence (AI) data monitoring are among the advancements disrupting the way companies are operating in today’s business climate. Bixby, Siri and Alexa have become our personal virtual assistants and other forms of AI are already starting to replace humans for task focused and rule-based routines.

Catching up with the times

Over the past few years, we have seen tax regulations being reassessed to cope with evolving business models and to ensure that accurate and fair numbers are reported. In today’s borderless world, there is an urgent need to facilitate transparency and exchange of information to cope with transactions moving at breakneck speed across multiple jurisdictions. In order to stay relevant, it is safe to predict there will be changes in regulation and tools.

Here are some of these predictions:

  • Tax regulators will step up to monitor business models emerging from disruptions through legislation, tools, and analytics, among other monitoring measures;
  • The development of tax control frameworks to effectively manage tax risks;
  • An increasing reliance on workflows, policies and technology to help reduce human error and time to document, manage and review tax data and risks;
  • An increase in availability and requirement for timely tax enriched data;
  • Greater demands of the tax professional of the future to be able to use data analytics and technology to support businesses in real time with their strategic decision making.
reimaging tax in a disruptive world

The time is ripe for your tax function to change

There has been a steady rigour of tax regulators pushing to closely monitor companies in the current business environment. For instance:

  • Requirements for transparency
    Under the Organisation for Economic Co-operation and Development (OECD)’s country-by-country reporting guidelines, UK companies that meet a certain criteria need to maintain details of their tax control framework online.
  • Exchange of information
    Malaysia has agreed alongside over 65 other countries to implement the Automatic Exchange of Financial Account Information.
  • Sharing of information
    The Malaysian Inland Revenue Board and Royal Malaysian Customs will be carrying out joint audits to address tax revenue leakages in the system.
  • Use of big data and analytics
    Some countries are looking into cooperative compliance to manage their larger taxpayers (an idea that is also supported by the OECD. There is also an increased use of Enterprise Resource Planning (ERP) platforms and other sophisticated reporting tools to manage financial and tax data.  
     

However, while many companies have embarked on Finance transformation journeys, inclusion of tax data and governance has not been as consistent. Coupled with cost pressures, there has been less recognition for the need for agile tax professionals and robust workflows to effectively manage tax risks. I expect to see more companies placing emphasis on these areas with the increase in tax policing mechanisms and tax audits.

Tax reimagined

With the rest of the business and tax regulators jumping on board the digital and AI bandwagon, it is time to review and assess your tax function’s readiness to cope with their demands. In my next blog post, I will discuss what the key considerations are before you embark on transforming your tax function.

Taking the first step to dealing with your tax challenges of tomorrow, starts today. 
Let’s chat.

 

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Pauline Lum
Tax Executive Director, PwC Malaysia
Tel: +60 (3) 2173 1059
Email

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