Perspectives

Think Differently with Tax Analytics

Short Takes...on Analytics

A blog by Beth Mueller, partner, Deloitte Tax LLP

Sometimes the gap between the status quo and breakthrough innovation is a matter of changing how we think. Tax analytics helps organizations think differently about tax issues, and in doing so, facilitates new approaches to improve business outcomes. This requires a more proactive approach to tax risk management, enabled by advances in technology, like data analytics.

One way data analytics is helping businesses reimagine their tax function is by improving the understanding and management of the tax implications associated with short-term business travel. In most organizations, employees who travel on business remain residents of their home location while delivering services outside their home location (i.e. state or country). Because of this, they can fall below the tax radar in the non-home locations where they are working, putting their organizations at risk for non-compliance. This oversight can mean millions of dollars per year in exposure to businesses for missing reporting and withholdings.

Where the data meets the road
Businesses are ripe with travel-related data from expense reports, travel records, badge scans, and other sources. Tax analytics capabilities can help organizations gain visibility into global travel-related data and potential tax implications. Analysis of this data helps businesses track travel of employees, identify areas of concern in states or countries, address locations of concern, and enhance payroll delivery.

The end result? Better cost controls for the business and increased satisfaction among those employees traveling on behalf of the organization.

Waiting on perfection
The stumbling block for many businesses is waiting for their data to be near-perfect in order to get started on a tax analytics initiative. Certainly, these organizations have to get better at collecting, integrating, and standardizing tax data. But it’s just as important to resist the trap of waiting for perfect data when “good enough” data will do. It’s wise to get started with the data you have, and grow it organically from there. With the cost of non-compliance on the rise, doing nothing is no longer an option.

Business traveler management is just one example of the intersection of tax and data analytics. Tax functions can apply data analytics to numerous business scenarios, probabilistic outcomes, decision criteria, and other business actions in ways that may improve processes for meeting tax obligations. Data analytics helps drive profit and value across tax touch points by facilitating more efficient and appropriate ways for businesses to meet tax obligations.

Going forward, data analytics has more in store to help deliver greater tax insights. Data analytic approaches are being deployed to increase business revenue, drive profit and shareholder value, and reduce tax liability.

Learn more about how tax analytics and other trends in Deloitte’s 2015 Analytics Trends report—available in interactive and PDF formats. Check it out and let us know what you think, and how we can help.

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