In a straight talk with Dataquest regarding, Brian Peccarelli, President, Tax & Accounting, Thomson Reuters lauds the GST rollout as it is pushing technology adoption among businesses in India.
It’s been over 100 days since GST implementation in India. What are your key observations?
GST is transformational for India; it marks the realization of a promising vision of indirect tax in India.
Understandably, the implementation of GST in India has garnered mixed opinions, but the Government appears to have been proactive in addressing challenges and removing impediments for industry at large.
The Indian Government has provided a platform for industry to provide feedback and making changes to the GST law. From providing return filing relaxations to reduction in tax rates and temporary suspension of reverse charge mechanisms, the GST Council has made all possible attempts to achieve a balance between the reform’s objectives and industry’s expectations.
I am confident that with time the issues will be ironed out and the reform will pave the way for a more effective and efficient tax system in India.
These are all very encouraging steps and I am sure that GST will pave the way for a more effective and efficient tax system in India, thereby contributing to the overall economic growth of India.
Technology adoption in the tax space has been rather slow. Do you see GST changing this trend in India?
It’s clear that GST is the single biggest driver for the adoption of technology in the tax space in India. Tax automation will lead the way for corporations to be compliant with the dynamic nature of the new tax regime and derive maximum benefit from it.
You have a very strong overview of the global tax landscape. How are other countries leveraging technology to administer and manage taxes?
Thomson Reuters provides tax and accounting technology solutions across the world; to corporations, governments, accounting firms, financial institutions, including 99 of the Fortune 100, so we feel we have an unparalleled overview. We are helping many countries with their work, but there are a few striking examples:
- In the United Kingdom Thomson Reuters is working closely with the British government on the Making Tax Digital initiative; which is the biggest change to ever impact the British accountancy industry.
- China has recently indicated they plan to leverage blockchain technology to collect taxes
- Dubai is introducing a new tax regime, including VAT and has announced its intention to turn itself into the first blockchain-powered government in the world by 2020; this has the potential to revolutionise the way tax is assessed and could lead to taxes being collected as the transaction happens.
- The Spanish government has recently introduced near real-time reporting; the SSI regime. It requires businesses to submit VAT registers to the authorities within 4 days of an invoice hitting a company’s system and is mandatory for all companies with turnover over €6million
Big Data is the buzz word these days. What role do you see it playing in the taxation industry? How can companies leverage it for increasing efficiency and accuracy?
We use our big data capability to solve the new digital tax reporting and accountancy challenges across the World and we are building platforms in the tax domain to leverage the latest in big data technologies. Last year our ONESOURCE technology leveraged Big Data technologies to provide extremely fast calculations on very large sets of transactional ERP data. Data sets of 1 Million to 12 Million transactions can be processed in minutes rather than hours, providing the detailed calculations necessary to comply with Transfer Pricing regulations.
Big Data and Advanced Analytics are being applied to generate natural language explanations of complex tax form calculations. This will lead to may new innovative tax products such as: Advanced “What If?” scenario modeling, Tax Optimization Engine/Tax Return Advisor, Theory vs. In-Practice (e.g. law vs. tax court precedents) identification and comparisons, and robust audit risk assessment.
A key challenge with regard to big data is the standard reporting file for tax, SAF-T, originally designed by the OECD. It was introduced in 2005 in a bid to ensure consistent reporting across the world, but has resulted in governments collecting raw, transaction level data from multi-nationals, which governments could eventually start mining. There is some fear among multinationals that this data could eventually form part of audit.
What do organizations tell you are their biggest challenges for BEPS implementation? What role can technology play?
The implementation of BEPs presents a variety of challenges for our clients. Rules are changing and this is creating a degree of uncertainty; data gathering is difficult as it requires information not normally held by tax professionals, like headcount figures.
There are also risks from a public relations perspective, as country by country reports transparency requirements could produce odd consequences; for instance, if the headcount in a low tax location is at odds with the revenue generated there.
Our clients are proactively telling us that technology is the key. Only technology can provide a solution which keeps pace with the data required in filings, manages the whole process at scale while providing the assurance of correct calculations. Spreadsheets and emails do not provide an adequate collecting mechanism for the myriad of data required, nor do they provide the required audit trail, if authorities seek to clarify data. Technology helps streamline the workflow and data gathering; flag the required rule changes; provides visibility and, crucially a clear audit trail for both internal and external stakeholders; including boards and national tax authorities.
What are the top three global trends with respect to tax technology that you see?
One of the biggest shifts is big data, as outlined previously. From our perspective, the other areas of greatest interest are:
- Blockchain, which will drive the future tax ecosystem. The distributed ledger capabilities and transparency will create disruption and opportunities within the tax and accounting profession. We’re currently talking to various national governments around co-creation and experimentation, ultimately to create commercial products with multi-national corporations and Governments.
- Secondly, we’re exploring artificial intelligence solutions in the area of tax compliance; to create the ability to train cognitive solutions on mathematical challenges. Data analytics and cognitive technologies will continue evolving and will make the audit process increasingly more effective and efficient.
- Alongside these trends is convergence. Emerging technology is developing at a rapid pace, but is also converging and creating whole new areas of interest. For instance, advanced data analytics and new areas of data science are growing from the intersection of blockchain technology and big data.