Page 4 of 4: Infrastructure Challenges and Areas for Improvement
It is vital to ensure that both hard copies and electronic corporate documents, tax files, and records are organized, retained, and easily accessible—not stored solely on employees’ hard drives. In addition to accessibility, these documents should be backed up according to the company’s IT policy. Any tax audit adjustments, including settlements, should be thoroughly documented and archived for future reference, ensuring compliance and readiness for any potential audits.
When documentation for critical tax processes is lacking, and tax authorities or corporate record retention requirements have not been adequately addressed, it is crucial to implement a comprehensive documentation process. This process should be regularly reviewed and updated to reflect changes in the operating environment.
The effectiveness of the tax department can be significantly enhanced by employing appropriate technology and tools that minimize the need for manual input. Utilizing integrated tools and technologies allows tax data to be collected once and reused across various applications, streamlining workflows. The indirect tax department should engage with key stakeholders regularly to facilitate knowledge exchange, with technology supporting these collaborative efforts.
ERP systems and other relevant technologies must be properly configured for VAT compliance, financial reporting, and planning. Additionally, dedicated IT support should be available for tax functions to ensure that the tax department has access to critical systems and applications. Ensuring the correct VAT configuration is implemented and maintained is vital for ongoing operations.
Substantial improvements can be achieved by replacing spreadsheets with advanced technology tools and systems designed to enhance effectiveness and reduce risks. Furthermore, systems and processes should be established to maintain the critical data required for tax compliance and strategic decision-making. Regular consideration of reporting, compliance, auditing, and planning needs will ensure that the tax department operates efficiently and effectively.