Skip to Main Content
Access your saved content
In an increasingly competitive and global landscape where tax rules are continuously shifting in markets around the world, companies implement complex operational strategies that have corresponding implications from a tax perspective.
And yet, taxes are often considered a byproduct of these decisions rather than a key analytical input to model and enhance the outcome of business decisions.
Through tax analytics, Accenture shows how companies can unlock value and have greater potential gains by developing a comprehensive grasp of their current tax situation while being able to foresee future tax implications of various business and tax strategies—an important capability for any organization seeking value creation and cost reduction.
Companies now have globally dispersed operations to utilize the best combination of lowest production costs, profitable sales and best growth opportunities. As a result, countries compete to attract foreign direct investment by reducing corporate income tax rates. But different countries offering different tax incentives equates to a complicated tax environment for multinational companies. Hence, it becomes all the more important for companies to decide where to source from, where to produce, and where to sell their products and services in. This is where tax analytics comes into play.
Tax analytics helps by standardizing processes that can be applied across the global business using sophisticated data analysis to precisely model tax implications of strategies and proposed operational changes. With the right data, analytical processes and technology, tax analytics can identify significant tax benefits in advance of implementing a business decision.
Some key findings that further lay emphasis on the importance of tax analytics:
Many tax organizations still analyze data manually on spreadsheets, which results in more time spent collecting and scrubbing data than leveraging tax analytics to unlock a broader range of value.
To avoid negative surprises—in light of recent examples where companies were forced to restate tax errors in excess of $500 million across multiple years—tax analytics can help manage information in a sophisticated way through automated processes that record and report complex and routine intercompany transactions.
In this context, only those companies that effectively use analytical processes and technology can unlock value, realize tax benefits and avoid surprises by evaluating data to optimize tax implications of present and future business strategies.
Tax analytics offers a framework that uses quantitative methods to generate insights from data, and then leverages those insights to shape business decisions and improve overall financial performance. Because tax analytics involves a broad range of capabilities, Accenture breaks the concept down into two types:
Descriptive analytics: This is the technical perspective rooted in data, software systems and infrastructure, with the goal of giving a company a comprehensive and accurate understanding of its current tax situation. This is the foundational step in developing a tax analytics capability, which is then automated and effectively set on autopilot. The information flow is configured to get routed through tax analysis and reporting applications to improve accuracy and efficiency, and reduce risk.
Predictive analytics: This is the second layer that builds on the foundation of descriptive analytics. It applies sophisticated algorithms and statistics to help draw correlations, recognize patterns and decide on forward-looking action. For example, predictive analytics can help maximize value and avoid unintended tax consequences in deploying a supply chain model for a new product or service.
Such a tax analytics model makes sure that data is accurate and easily accessible, routine tax analysis functions are set on autopilot, standardized data is available throughout the enterprise, and helps gain access to foreseeable tax implications—enabling the tax function to provide valuable insights.
Accenture recommends developing tax analytics capability to not only gain insights but turn those insights into actions and business outcomes—transforming the tax function from one of mere compliance to a strategic partner with the business.
Building analytic capabilities requires considerable investment in processes, data, technology and people. Read this report to learn how Accenture can help your company unlock value through tax analytics, setting forth your company on the path to high performance.
June 29, 2012
Skip Footer Links