Data skills in the tax function: the push and the pull

Continuing his series on the tax skills of the future, Stuart Tait explains why data capabilities are now critical for tax professionals.

The skills profile of the tax function is evolving – for reasons I explored in my previous blog. Collecting, processing and analysing data is becoming central to how tax teams comply with international regulation, make their calculations, and meet their reporting requirements.

It’s a point made recently by Logan Wort, Executive Secretary of the African Tax Administration Forum. In his keynote address at KPMG’s Africa Tax Summit, he said tax teams must be as familiar with data as they are with regulation.

There are two key reasons for this. Firstly, in more and more jurisdictions, submissions to tax authorities are now made digitally, and in real time (or close to it). And as a result, authorities can quickly and easily reconcile taxpayers’ submissions with their returns.

That gives you little or no scope for manual interventions or corrections: what you send must be right first time.

Secondly, many of the everyday tasks that tax teams carry out are ripe for automation.

AI tools can perform repetitive tax processes far faster than human beings, and without making mistakes – giving your employees more time for strategic, value-added work. But deploying AI solutions to do those jobs will mean first training them on your tax data.

As such, there’s a ‘push’ factor driving the need for data skills in the tax function: compliance will be impossible without them. And there’s a ‘pull’ factor too: embracing automation will allow tax functions to generate more value, and act as a more strategic partner to the business.

As the skills demanded of tax practitioners change, heads of tax must ensure that their people have the necessary capabilities. But what exactly are these? What do we mean when we talk about ‘data skills’?

To answer that question, let’s take a look at the different stages of the of data analytics process:

• Creation and storage: Much of the data that tax teams work with comes from outside the tax department. They’ll thus need to know how and where that information is being created and stored within the organisation. And they’ll need to understand the difference between structured information in a database and unstructured data. The former is usually ready for analysis, while unstructured data will need more treatment beforehand.
• Extraction, transformation, load: Tax professionals will need to be familiar with what’s known as the ‘ETL’ process. Something like 80% of analytics work goes into preparing the data in the first place. That means extracting it from the systems it’s stored in; transforming it for use by analytics tools; and loading it into them.
• Analysis: The value of information to businesses lies in the insights that can be pulled from it. Having identified, obtained and processed the requisite data, tax practitioners will need the ability to mine it, so as to spot the risks and opportunities that it highlights.
  

The three stages apply to all data operations: from running basic, day-to-day tax processes to AI prompt engineering and creating bespoke algorithms.

Not every member of the tax function will need to understand every element of each stage; your IT team will be able to help with some aspects of them. But they must know what’s involved, in order to work with the tech department and articulate their requirements. 

Ultimately, you’ll need a range of levels of data competency within your team: from those with a basic understanding to expert data scientists. The task for tax leaders is to find the right mix – which you can do by following these four steps:

• Map your team’s current data abilities – who is at what level of expertise?
• Determine your target future state – which data skills will your tax technology strategy demand?
• Make use of existing resources – what learning tools and experiences are available within the firm to enhance your team’s abilities?
• Fill your data skills gaps – how will you deliver the missing capabilities to your team members, to strike the right balance throughout the function?
  ,

KPMG’s Tax Reimagined team can take you through these steps. We’ll help you to assess your team’s data abilities, and ensure you have the ideal combination.

Plus, our Digital Tax Academy can help you plug any gaps. The Academy provides a tailored mix of hands-on exercises and demonstrations, designed to meet all of your data skills requirements.

Please get in touch to see how we can prepare your tax team for a data-led world.