The Future of Tax Technology: Emerging Insights

The world of tax software is continually evolving, shaped by rapid advancements in technology and ever-changing regulatory requirements. At Corptax, we’re leading the way by integrating new technologies to make tax compliance easier, more efficient, and more accurate for our clients. In this post, I’ll share the latest trends transforming the tax software industry, including artificial intelligence (AI), machine learning (ML), data visualization, and cloud computing. Plus, I’ll discuss exciting developments driving these changes and how Corptax stays ahead of the curve.

Three Main Drivers Behind Our Current Activities

Three main factors are driving our current development efforts to ensure we deliver top-tier tax software solutions to our clients.

1. Customer Needs: We see tax departments under increasing pressure to do more with less. By actively listening to their needs and pain points, we prioritize development projects that will have the biggest impact on their day-to-day work.
2. Industry Trends: With the tax profession facing a talent shortage, we focus on creating new tools and processes that promote automation, time-savings, accuracy, and consistency. We’re also introducing analytics tools that allow tax teams to gain insights and contribute strategically to tax and organizational planning. Additionally, we keep a close eye on the latest technology trends, such as AI, ML, and cloud computing, and we explore ways to leverage these advancements to improve our software.
3. Emerging Regulations: We pride ourselves on staying ahead of new tax regulations and integrating these changes into our software to reduce our clients’ workloads. A great example is our Pillar Two solution, CSC Corptax® Global Minimum Tax (GMT). As soon as the Organization for Economic Cooperation and Development (OECD) released its model rules for Pillar Two, we sprang into action. We formed a business review team to assess the impact on our customers and to determine how Corptax could help them meet the new demands. Within four months, our team:

• Mapped out market requirements
• Developed a short- and long-term plan to address these needs
• Delivered a first-to-market solution to meet the most immediate client need: risk analysis to identify areas of exposure.

We then expanded product functionality to support detailed planning for various Pillar Two calculations, including:

• Top-up Tax (GloBE Income and Covered Taxes)
• Substance-Based Income Exclusion
• Income Inclusion Rule (IIR)
• Undertaxed Payments Rule (UTPR)

And finally, as customers moved from the planning phase into the operational mode for provision, we were ready with enhanced automation. We integrated Corptax GMT with our provision products and added functionality around safe harbors, Qualified Domestic Minimum Top-Up Tax (QDMTT), and more. Looking forward, as we continue through 2024 and move into 2025 and 2026, and as more countries release their own local country rules (such as the EU, South Korea, and Japan), we will continually update the tool to support local country calculations and reporting including the GloBe Information Return (GIR).

Our Tech Investment Dollars: Where Are They Going?

We are deeply committed to empowering Corptax users with forward-thinking solutions. We consistently invest in innovative advancements, and we’re excited to be focusing in these key areas:

• AI/ML: We’re developing AI- and ML-powered tools to automate routine tasks like data entry and form completion. In time, we will give clients the ability to drive predictive insights that will improve decisions important to company planning.
• Data Visualization: We continually enhance our data visualization tools, so our customers can extract valuable insights from their tax data and present them to stakeholders in easily understandable ways. These insights improve compliance, identify risks, and support decisions.
• Cloud Computing: We’re migrating our software to the cloud, giving customers greater flexibility, scalability, and security.

We also collaborate with other tech vendors to streamline tax processes and enhance data management. For example, our major partnership with Microsoft leverages Azure services, Power BI, and Microsoft 365. We also partner with Alteryx to streamline workflows and offer new ways to automate processes, perform calculations, and transform data for modeling and planning.

Engaging with Clients to Co-Develop Future Product Releases

Client engagement has always been a cornerstone of our development process. We regularly conduct feedback sessions, collaborate with clients in forums, and host advisory councils to understand our clients’ evolving needs. Co-ideation and co-innovation involve a continuous dialogue and truly inspire us. These learnings allow us to align our roadmap with the real-world challenges that in-house tax professionals face.

Customers can become beta testers or early adopters by engaging in our ongoing conversations about tax complexities and challenges. Our Bright Ideas program offers a platform for clients to share their issues and hear about new solutions. Plus, our advisory groups and annual conference give customers a chance to explore and provide feedback on enhancements in the development pipeline. These hands-on experiences open valuable discussions and help us learn and improve.

Delivering Timely and Relevant Products in a Changing Tax Landscape

When balancing short-term fixes vs. long-term enhancements, we don’t chase bright and shiny ideas; we concentrate on where we can add the greatest tangible value. I ask my team two primary questions when they bring an idea, “what problem are we solving? and “why would customers care about this?” If we can clearly articulate the value we’re delivering to solve the problem and simplify clients’ lives, we move forward on all cylinders.

For example, when the OECD introduced Pillar Two and the GMT, we knew we had to act quickly. We determined our clients already had most of the necessary data within Corptax. We provided data visualizations to help customers quickly understand and communicate potential tax impacts on their organizations. By using technology to source, organize, and report on GMT data, clients were able to save significant financial and human resources.

Leveraging The Next Tech Tool

AI is a significant disruptor, and its potential to solve problems is still being explored. For example, AI can help taxpayers leverage large volumes of tax data to identify year-over-year trends, aid in understanding tax impacts on growth strategy, and help minimize effective tax rates. But AI will likely never have the nuanced understanding a seasoned tax professional has. Complex tax scenarios often need professional judgment and interpretation, which AI may struggle to provide. Therefore, it’s all about striking that balance.

Key Takeaway

At Corptax, we are dedicated to delivering tools that align with the current and future needs of in-house tax teams, whose primary responsibility is to minimize their company’s effective tax rate. To achieve this, they must manage tax risk, own their data, automate processes, and empower their people with the right tools. We encourage our customers to work closely with their Account Managers, support teams, and Corptax consultants to fully leverage their Corptax technology. We will continue to partner with them to ensure they stay ahead of regulatory changes and use leading-edge technology for strategic planning, risk identification, and cost reduction.