The technologies enabling digital transformation in tax

In an era of global economic and political instability, alongside rapidly changing business requirements and increasing digitisation, flexible and modern software solutions are essential for any business to remain competitive.

This is especially true in the tax reporting landscape. Cross-jurisdictional legislation like Pillar Two, combined with the ever-increasing volume and frequency of data, is placing increased demand on businesses and their tax functions. The sheer pace of change is requiring businesses to implement processes that report data from multiple systems accurately and consistently.

These businesses must adapt and explore how digital solutions can be implemented, to transform the way they deal with the ever-increasing administrative burden of tax reporting. So what technologies are being utilised to achieve this?

In the fast-moving world of digital transformation, companies are being challenged more than ever to provide applications that are flexible and cost-effective. Traditional software development - often characterised by long and complex development cycles – has been replaced by agile development of fully automated processes.

One of the key solutions to emerge from this are low-code technology platforms. These can enable professional developers – as well as business users without specific programming knowledge – to create and adapt applications that make business processes more productive, provide more efficient value chains, and potentially create new business models.

The development of low-code platforms can provide new ways to simplify programming, while leveraging the benefits of modern technology and advanced programming languages. This should make it possible to create software applications faster and more effectively than via traditional methods.

Low-code platforms typically use visual interfaces with simplified logic and ‘drag-and-drop’ functionality. This allows users with no formal knowledge or background in coding and software development to create applications for a variety of purposes, such as mobile and business apps.  These users are often termed ‘Citizen Developers’.

In practice, low-code platforms are a means of fast app development and automation that accelerates digital transformation, serving to optimise business processes and help drive efficiency and growth. 

A primary example of a low-code tool are Robotic Process Automation (RPA) or “bots”. These typically involve the use of automated systems to perform tasks or operations often unattended by a human user. The programming involved – depending on the complexity of the task – can range from simple, predefined sequences of actions to more complicated algorithms that enable adaptive behaviour.

These bots still rely on the input processes of the users / processes in question. The output is then used to govern the bot’s subsequent actions to ensure consistently accurate and efficient performance at scale.

In an environment of vast and complex tax reporting, robotic process automation can offer numerous benefits, including:

• Increased productivity and efficiency of the business
• Improved quality and consistency of data reporting
• Flexibility and scalability of systems
• Freeing up staff for more ‘value-added’ tasks

Within KPMG’s own tax practice, we have undertaken a project to assess the end-to-end processing of corporate tax compliance to identify use cases for technologies, such as those outlined above. We began by looking at the process holistically, then zeroing in on areas where staff were engaging in repetitive tasks involving transferring data from one process or system to another. 

We identified several use cases for RPA solutions to automate this manual and limited value-add work.  By enabling the “bot” to do the heavy lifting in these areas, we not only improved efficiency but also cut down on the errors that were previously identified in our internal review processes. This freed up resource to focus on the technical tax consideration of our clients’ requirements, rather than requiring our team of tax professionals to be data processors.

The days of transformational project teams being formed – and then disappearing after a period of requirements definition – are gone.  Business requirements are evolving at a quicker rate than ever, and it’s imperative that technology teams can deliver iteratively and at a pace that matches what’s needed. Low code solutions are one way of achieving this. 

At KPMG, we are unique in the offshore environment in that we operate as an Islands Group – including the Crown Dependencies, Cayman, Bermuda and Malta. KPMG Islands Group operates within the wider KPMG Global network.

This has enabled us to leverage expertise in the offshore market and to access technology from the wider global network, while strategically applying local expertise and infrastructure to develop digital solutions that greater enable us to meet our clients’ ever-evolving tax requirements.

We continue to invest in evolving our approach to tax to ensure we deliver what is important to clients, enabling them to comply with their requirements in a cost-effective and efficient way.

If you are interested in exploring how KPMG can work with you to transform your approach to tax reporting, please get in touch with a member of our tax team.