Emerging reporting requirements

Tax transformed series

New reporting requirements, in Canada, the United States and globally, are adding to the workload of already-overburdened staff. The existing tax function may find the increasing requirements a challenge, as inadequate access to information, outdated technology, lack of documentation and disconnected systems continue to be a reality for some organizations.

But the new requirements don’t have to be a challenge. Rather, they can be an opportunity to address the broader picture, including risk management, while adding value to the organization.

Multiple challenges

Many Canadian organizations are struggling to understand, act on and comply with several provisions, including:

the Foreign Account Tax Compliance Act (FATCA)
the Common Reporting Standard (CRS)
Council of the European Union directive DAC6
the Organisation for Economic Co-Operation and Development (OECD)-recommended Country-by-Country Reporting (CBCR) standard
Canadian requirements, such as T106, T1134 and T1164 in the agriculture sector and the Extractive Sector Transparency Measures Act (ESTMA) in mining, oil and gas

Finding the right information at the right level can be a challenge. The desired information may appear in different forms in different places, requiring staff to manually dig through emails, binders of paper and multiple spreadsheets. Undocumented processes may leave staff scrambling to find certain information. Platforms and systems may be outdated and inefficient, with function on top of function added on like disconnected layers. Staff may find themselves repeating the same tasks to find overlapping information necessary to comply with the different regulatory regimes. Some companies may be overloading their customers with repeated information requests at the risk of alienating them completely.

Transparency and accuracy

It’s important to remember the end goal of these new requirements. Governments are trying to fight corruption, tax fraud and tax evasion. Taxpayers and consumers are demanding greater transparency from both corporate and public bodies. For many organizations, the danger of breaking the rules is less about the fines and financial implications and more about the potential damage to their reputation.

Data must be of good quality, timely and accurate. Canadian and US authorities have already announced upcoming FATCA and CRS audits, focusing on the need for complete and accurate customer data. Relying on poor or incomplete data exposes Canadian organizations to audit risk, reputational risk and unnecessary expense.

Solutions and tools

Organizations can begin with a self-assessment that considers important questions:

What information do you need?
How are you sourcing it?
Does the information already exist in a financial or human resources system, or is it data someone needs to collect?
What's the most efficient process to collect new information or assemble and repurpose information that already exists in your systems?

By standardizing sources of information, reusing information when possible and automating the process where feasible, organizations can ensure consistency and drive many inefficiencies.

A number of tools and technologies can help. Improved data management processes let you collect, automate and consume tax-ready data. Collaborative platforms automate workflows, enabling teams to work together more efficiently. Strong internal controls ensure important information is kept and properly archived. Solutions like our tax data hub, an Excel-based framework, gather and connect data from multiple sources. Data can then be easily pulled from this single hub to match different reporting requirements and formats.

Beyond compliance

Organizations can benefit from conducting a tax strategy assessment to determine where they are, where they want to be and how to get there.

By making the tax function more efficient and effective, organizations can redesign, redefine and redeploy tax to be a strategic business asset. Less time and energy spent on document review and manual data manipulation means your highly skilled professionals can focus on providing strategic advice to your business. At the same time, greater access to useful information allows the tax group to defend tax positions, make strategic decisions and engage in richer dialogues.

While companies must adhere to strict regulations on how they handle the information they collect, with the increased volume of data, artificial intelligence and machine learning are helping to solve complex tax challenges. By fundamentally reimagining the technology, people and processes of the tax function, organizations can unlock the power of data and analytics. This informs your decision-making and creates value by letting you better analyze trends, assess risks, make predictions and identify business opportunities.

Assess your operations

Examine where you obtain your information, how the data is recorded and how it’s compiled.

Enhance your processes

Look for ways to standardize sources of information and automate the data management process.

Embrace tax technologies

Take advantage of software tools to reduce reporting errors, improve the quality of your data and free up skilled staff to focus on more strategic issues.