A perfect storm driven by three forces is transforming the tax industry at an unprecedented pace, including a shifting global regulatory landscape, like the US Tax Reform and EU’s General Data Protection Regulation, technological innovation, and the difficulty of finding and retaining professionals.
To help clients get ahead of these challenges, Deloitte embarked on a three-year digital transformation plan in 2018, dubbed Tax in 2020. On Tuesday, we attended a demo day to learn about the core technology tools that have sprung up from this initiative.
Here are the key insights we gained about the tools.
AI is entering the tax world to reduce errors in tax filing, free up professionals from repetitive tasks, and keep clients up to date on changing tax regulations. Deloitte has developed a tool, dubbed Cognitive Tax Insight, that leverages AI to analyze sales and use tax.
The technology aims to help companies avoid overpaying tax — in any given year, tens of billions are overpaid by Deloitte clients, for instance — by scrutinizing transactions to recover unnecessary payments, not least due to errors. myInsights Signal Alert, on the other hand, uses AI to trawl through the internet to identify changes in tax regulation or news pertaining to specific tax topics that are relevant to a client. A third tool, dubbed SynTax, deploys natural language generation to simplify tax return processes.
Data is crucial for companies to increase efficiency in their tax processes. However, data has also become significantly more diverse and unstructured than ever. The impact of this is that companies have to spend more time and resources collecting, cleaning, and organizing their data to make it useful and understandable for analysis and reporting.
Deloitte has developed a data collection and wrangling platform to retrieve raw data and convert it into information that can generate meaningful insights. According to Deloitte, the platform is able to save 85% more time when used, compared with conventional approaches.
Deloitte’s demo day illustrates the growing digitization of tax processes — a boon for fintechs that leverage it accordingly. According to the firm, in a survey of 2,000 clients, 30-40% think there’s more work to be done when it comes to tax-related processes today. This growing complexity, coupled with the lack of tax professionals to serve the demand, provides a heightened role for technology. For fintechs, this presents a number of opportunities to tap into.
One such opportunity is to integrate tax-related tools within their product suite, which could be especially valuable for small- and medium-sized businesses (SMBs) and freelancers that may not have the resources for dedicated systems. Starling is one such example: Its app integrates with accounting tools like Xero to help SMBs that use its business accounts meet their tax reporting requirements more seamlessly. With heavyweights like Deloitte also servicing the space, smaller players could look to follow in Starling’s footsteps, either through marketplaces or bespoke integrations with specialist tax technology providers, to keep up.
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