Why the role of the Tax Manager needs to change in the global economy
Tax groups tend to be so detached from the rest of the business, usually only dealing with data from reports run after the month end close and then making journal adjustments. Journal adjustments that are to correct the numerous mistakes made by users entering the incorrect tax rates because they don’t’ know the difference between a Zero rated, exempt or reversed charge. Further to this, the inadequately build tax solutions often fail to even reveal half of the incorrect transactions.
Change is needed and this is something that we actively work with our clients to do. First you need a comprehensive indirect tax solution to capture the tax in the detail needed to accurately be able to prepare for the VAT returns as well as any other fiscal reports. But power is nothing without control and it does not matter how good the system used, if the users don’t know what they are doing then the data coming out is only as good as the data going in. The third party tax providers who are expanding out side of the US market are simply not needed. Companies like eBiz Answers for Oracle implementation and the Key Group for SAP already have tax solutions that utilize the ERPs functionality. At eBiz answers we have in effect created a third party tax solution without it being a third party product!
The Tax Group needs to be given more access to the data but not directly. The use of tax analytics to identify tax issues on a more regular basis than once a month after the month end close means that problematic transaction can be identified and corrected at source. Whats more is that users who need to correct their own mistakes will often learn not to make them again so the number of issues starts to dramatically come down. By the time the month end comes around, the majority of issues have already been resolved making the month end VAT reporting faster and easier.
But for most companies, this never happens as they’re bound by the poorly designed ERP indirect tax solutions put in place because when an implementation takes place, consultants with VAT knowledge are extremely rare and the cost to put in an enhanced solution is often carried by the system integrator. A simple tax solution means more profit to the system Integrator!
In fact I was told by a partner of one of the big four consultancies that they never even attempt to include the price of an enhanced VAT solution in their bidding because the extra 100,000 it will cost to the project could be the deciding factor in whether they get it or not and the IT director does not care about VAT when it comes to a successful implementation.