Episode Transcript
[00:00:00] Speaker A: Foreign.
So hello everyone. Welcome to our latest podcast series A and M Tax Tax Policy Updates where we can bring you insights into the latest developments into global tax policy and controversy matters.
I'm Shawn Lockhart and I lead our Tax Performance Improvement group in the US with 20 plus years of experience with the big four and with multinational corporations.
My focus is optimizing internal tax departments through people, process data and technology.
And I'll just put an emphasis on the data because I know that's that's very painful for most clients.
I'm based out of our national office and I'm joined today by Karina. Karina, would you like to introduce yourself?
[00:00:50] Speaker B: Hi everyone. I'm a Senior Director of Tax Technology and Transformation Practice of Everest MSL based out of Hong Kong. I joined A and M July last year and I have about 14 years of experience and specializing in transformation programs to optimize finance and tax processes through the use of data and technology and having worked previously at ey.
[00:01:17] Speaker A: Thanks Karina. Okay, let's launch into the podcast today.
Today's discussion will cover five focus areas.
Navigating the complex P2 data landscape integrating process across the tax life cycle.
Building a strong tax data architecture, Strengthening governance and controls in charting a practical roadmap for the future.
A lot of clients in the US are really taking this opportunity with Pillar two to revamp some of their other tax processes such as their tax provision, cleaning up some deferred taxes and really understand, getting to really understand their source data needs.
Over the past year, Pillar 2 has become a global talking point.
It's not only been a point of contention just on what's going to happen with the law, but finally we have different jurisdictions that are making adoptions and putting regulations behind this.
It isn't going away, which I know a lot of people have have heard about over the last year. It's here to stay. It's just it's going to be worked out through the individual jurisdictions as to exactly what the following requirements are.
We are now dealing with an unprecedented need to gather, validate and connect data across finance, tax, legal and HR systems, all at an entity level as well as a jurisdictional level.
Pillar two is accelerating the digital transformation of the tax function worldwide. It's pushing organizations to rethink how they manage data, automate workflows and embed trust in their numbers.
Karina, why don't we start with unpacking some of these complex data requirements?
[00:03:10] Speaker B: Yeah, Sean, Pillar two demands an exceptional level of data granularity. Companies need to capture information from multiple dimensions and also to calculate the tax outcomes based on consistent and traceable inputs. Many organizations are realizing that were not designed for this. Data often sits across various source systems, reporting tools and spreadsheets. The real challenge is really pulling it all together into a single standardized framework.
Finding a clear data model early is very essential and in particular that's to align the interpretation and definitions across the organization on the model rules. And Sean, getting the data model right is only the first step. The next challenge is making sure the data flows seamlessly through the entire test life cycle. From collection to calculation to reporting
[00:04:11] Speaker A: exactly. Pillar two does not happen in isolation. It cuts across accounting, tax provisioning, compliance and reporting. If each of these processes run separately, data gets duplicated and errors compound.
You also have jurisdictions that are comparing data across organizations and across jurisdictions sharing that data. So we really have to make sure that this is firmed up. Integration means building a connected workflow where information collected at the source feeds smoothly into the tax provision, Pillar two calculations and the return to provision without manual intervention. Ideally, technology plays a big part here. Automation tools and APIs can push validated financials and tax data directly into your reporting systems, making the entire process repeatable and controlled.
This not only speeds up prior period activities, but also gives you real time visibility from source data through submission.
Ultimately, a process integration transforms Pillar two from a reactive compliance exercise into a proactive data driven workflow that builds confidence in your numbers. And again, jurisdictions are comparing information so that's pretty key that the data is succinct and normalized.
A lot of my clients are rethinking their provision process as part of Pillar 2, Organizational Readiness and those who do not have a tax provision platform or software are rethinking that decision so they can take advantage of ingesting data once and being able to use that platform to revalue any deferreds for Pillar two purposes.
It's also a great time to pre bout deferred taxes and other process improvements to make sure that those are less painful and aligned to the department's objectives which is touching data once.
[00:06:10] Speaker B: Yeah, I agree to that. Shawn.
A Future Ready Tax function stands for data quality, consistency and governance. The data foundation for tax should be created through close integration within the record to report process and on an enterprise wide centralized platform to drive the consistency and efficiency. And Sean, we are also seeing a lot of our clients and tax departments building centralized tax data warehouse. Can you share some of your experience around this?
[00:06:41] Speaker A: Sure.
An enterprise data platform provides a central foundation to ingest, harmonize and deliver tax relevant data from across the enterprise as a single source of the truth.
It should be positioned as a core component of the enterprise and finance data architecture and form part of the overall data strategy.
The effectiveness of a tax data platform is significantly enhanced by centralizing and consolidating tax relevant data through integration with natural systems such as ERPS and EPMS for tax. Rather than being merely a consumer of the financial data over time, the integration would support building a tax data ecosystem system to be aligned with any enterprise wide data initiatives.
And remember, tax is the biggest user of data across the entire organization, so this is your chance to get it right not just for pillar two, but across other tax data needs Exactly Once
[00:07:44] Speaker B: a strong foundation is in place, we can then layer on top the automation, the dashboard and predictive modeling. It moves the function from reactive compliance to proactive analysis, creating the tax environment that is really agile and ready for future changes. So with greater reliance on technology and cross functional data comes really need to focus on the responsibility for governance and controls. Establishing data ownership between finance, tax and IT and other departments as well. Using workflow tools for sign off and approvals and ensuring the alignments and accountability is critical.
[00:08:27] Speaker A: Looking ahead, what we are seeing is that Pillar two is driving tax functions to invest in long term digital capabilities, not just for compliance but to add strategic value.
The journey typically starts with compliance and evolves through three phases.
Standardize the data, automate the process and then enable analytics and predictive insight. With each stage the function becomes more connected and forward looking.
With that, it brings us to a close of the podcast. Thank you so much for joining us today.
Stay with us as we continue the journey in our upcoming podcast. Please also check out our monthly newsletter which will bring the latest key tax updates across our selected global tax network. And don't forget to follow this channel. There will be regular insights and updates through podcasts coming your way. If you haven't already done so, please subscribe to the newsletter directly in your inbox. Thanks for joining us today.
