Empowering tax compliance through connected data and technology

It goes without saying that compliance technology is crucial. Companies need to capture, analyse, and report on tax data in unprecedented detail, and the risks of non-compliance — from costly penalties to reputational damage—are greater than ever, leveraging compliance technology solutions is essential.

But what about the bigger picture? The deployment and proper utilisation of tax compliance technology can not only transform compliance itself, but also build trust across the organisation, drive business model reinvention, generate incremental value, reduce costs and risk, and boost shareholder confidence.

Having systems that can bring everything together in one place with inbuilt controls and insights can be an especially powerful way of delivering these benefits. But tax leaders need to be aware of the challenges as well as the opportunities that come with compliance technology. Given that digital maturity is often still relatively low, the overriding imperative is to ensure compliance technology delivers real value today. That means not only integrating the tax function through technology, but also ensuring it’s agile enough to adapt quickly to both external forces, such as new regulatory requirements, and internal changes, such as a merger or acquisition.

In this article, we discuss the 5 key considerations tax leaders should take into account when building a trusted compliance data and technology ecosystem:

There’s no escaping the fact that delivering real digital transformation is hard. According to PwC’s Future of Tax survey, 79% of respondents see technology as key to their future success, yet far fewer have managed successful implementation across their entire tax function.

What’s more, the same survey found fewer than half of all companies think their data is in a system-ready state to manage and report on. And only around a quarter believe they’re currently very effective in implementing control frameworks over tax data, generating insights or anticipating regulatory change.

There’s clearly still some way to go in creating truly connected, data-driven compliance in many organisations.

Where to begin? Given that many organisations are still not fully capitalising on their existing technology portfolios, tax leaders should start by looking at the tools and platforms they already have.

What’s more, tax leaders should be looking to create alignment with the entire C-suite on the long-term goals they want to achieve and use this to guide a coordinated trusted data transformation journey across multiple functions. This means that the tax function is not addressing the ‘trusted’ data issue in isolation.

But what if existing systems aren’t up to the task? This is where it pays to think holistically. A single tool rarely satisfies the complex demands of compliance across geographies and business units. And many organisations operate with siloed systems and outdated technology, which can lead to higher costs, disjointed processes, and difficulties in accessing accurate data quickly, which can impact on decision-making.

A robust, flexible technology ecosystemOpens in a new window—one that integrates tools from a variety of trusted partners — can deliver far more effective outcomes.  These ecosystems can take many forms, but typically involve some combination of inhouse technologies, third-party technology providers and/or outsourced/managed service providers.

The core value of a technology ecosystem is the way it can connect all parts of the tax function into a single view, encompassing direct and indirect taxes, Pillar Two, and integrating workforce and legal functions. Agility and ease of integration are both key here — organisations need to be able to quickly add in new technologies as reporting requirements change and technology evolves.

Today, for example, it’s possible to integrate continuous monitoring and process mining tools, such as SAP Risk and Assurance Management and Signavio into your ERP systems directly, to get valuable insights into where processes are deviating from compliance standards. By pinpointing weak spots with a laser-like focus, these tools enable compliance teams to act proactively and minimise risks.

This type of integrated approach allows you to pre-empt compliance issues in real time and ensure trusted reporting. A technology ecosystem can also connect tools used to cleanse and transform data straight into tax reporting software, providing that much-needed digital audit trail and connecting your reporting with upstream data sources. 

Of course, ecosystems are more than just technology. Multidisciplinary expertise is also needed to leverage the technology in the right way. But in a world of tight budgets and rapid business evolution, recruiting and retaining this expertise can be costly and time-consuming. Accessing human-led and tech-powered ecosystems built by a third party can solve this, boosting resilience while allowing a business to focus on growth.

You can’t talk about technology transformation today without mentioning artificial intelligence (AI). From predictive analytics to classification algorithms to text-generation models, AI is delivering a new level of insight, precision, and speed for compliance teams. 

AI-driven tools can make tax compliance more agile and cost-effective — whether that’s managing tax notices, analysing data, performing peer benchmarks or improving audit-readiness. The scalability and speed of these tools opens the possibility of genuinely real-time, data-driven compliance.

But AI isn’t the only tool in the toolbox. Cloud computing, for instance, continues to revolutionise how businesses approach compliance, offering scalability, accessibility, enhanced data security, and, crucially, easier integration across the technology ecosystem.  This combination means it remains the ideal platform for launching a connected compliance transformation. 

In summary, here are 5 key considerations tax leaders should review when building a trusted compliance technology ecosystem:

• Assess readiness. A readiness assessment is the only way you can properly assess your compliance maturity, identifying gaps in data, processes, technology capabilities, and integration points.
• Focus on data. Many companies’ data infrastructures lags behind their technology ambitions. Improving data collection and management practices is a critical precondition for using AI and other modern technologies in compliance. AI relies heavily on data to make decisions. High-quality, clean, and well-organised data is essential for training and deploying AI solutions effectively. Much of that data sits behind companies’ existing tax systems within their ecosystem. Existing IT infrastructure, software systems, and workflows may require upgrades to unlock the value of that data through integrations with new AI infrastructure.
• Think beyond filings. A compliance technology ecosystem needs to also help organisations problem solve and spot opportunities for growth. For example, Operational Transfer Pricing goes far beyond tax to controllership, treasury, shared services and other internal functions. Unpredictable economic and geopolitical circumstances require agility from a tax operating model perspective to integrate tax planning with operating models to develop efficient and innovative strategies around trade, supply chain, and digitalisation.
• Prepare for continuous change. Digital technologies are constantly evolving, and any technology transformation needs to keep pace with this inevitable change. Adopting an end-to-end lifecycle perspective on compliance technology can help anticipate future needs and maintain a state of readiness. We are building and curating technology ecosystems for our clients to find the best combination for their specific needs and circumstances, leveraging the client’s existing technology landscape and allowing them to benefit from the rapid technology development, e.g. in AI. A strong alliance strategy with leading technology providers enables PwC to integrate cutting-edge solutions into our services, helping our clients adapt to rapidly changing technology landscape. By combining deep industry knowledge with innovative tools, we empower organisations to drive efficiency, manage risks, and stay ahead of disruption.
• Think connected compliance. Rather than viewing compliance as a series of discrete steps, connected compliance envisions it as an end-to-end, integrated process. In PwC’s Sightline ecosystem, for example, multiple technologies work in harmony to deliver a seamless compliance experience, from data capture and analysis to real-time reporting and predictive insights. 

Trusted compliance technologies provide a powerful advantage for businesses navigating today’s complex regulatory landscape. In an age where trust is a valuable currency, a robust compliance data and technology strategy not only safeguards the business but also empowers it to adapt and thrive in an increasingly uncertain world.