Tax manager making decisions based on low-quality data

Tax people make a lot of decisions, every day again and again. Important, strategic, sometimes pivotal decisions. And very often the decisions are hard to make. The reason why? Tax is not binary. It is not about a 1 / 0 situation. Tax comes in many shades of grey. Given that it is all about the details, the positions that should be taken are often very delicate. We tax managers know that whatever we do, irrespective of how well we analyse and document our positions, controversy is and will be part of life. Questions will come up. Guaranteed.

One of the more important remedies for controversy down the road, is data-driven decision making. I mean, positions that are taken based on high-quality data. Data that is up to date, that has been validated, that comes from reliable sources. The problem here is that most tax people struggle to obtain such data. And this struggle only further inflates given that the data comes from all corners in the organization, meaning from finance, HR, the business, treasury, legal, … Different data owners, with different priorities. Furthermore the data can be qualitative and quantitative. It can come from source systems, but very frequently it does not. It can come in different formats, think about spreadsheets, PDFs, csv’s, WORD, email, screenshot, … And the rant can continue…

When talking about the transformation of the tax function, some tax teams cut corners, and go to the sexy stuff first. I understand this, it is tempting to do so. They check whether machine learning and AI can unlock value. They want to build advanced engines. They want to automate what is possible and remove all manual work. And yes they will integrate with different systems hoping for silver data bullets. All very cool, obviously. But without the groundwork in place, it will be a waste of time and money.

First things first, meaning, start with solid data management. Invest in a proper structured tax data repository in order to capture all your tax-relevant data and documents across the different tax domains. This can include crucial financial, legal and HR data as well. Have it cleansed, have it structured, have it up to date. At all times, at your fingertips. Allow unlocking intel from this multidisciplinary data set, let it be a solid basis for decision making. Anticipate on smart and efficient data capturing and ingestion strategies.

Only if such a structured tax data repository is in place, the next transformation steps will be successful.