A shifting tax landscape demands new levels of agility
The tax landscape is transforming. As governments around the globe demand higher standards of transparency and governance, tax professionals are under increasing pressure to adapt.
Several regimes exemplify this trend:
- EU’s VAT in the Digital Age (ViDA): This initiative mandates real-time tax data reporting and e-invoicing, challenging the periodic adjustments traditionally handled through spreadsheets.
- OECD Pillar Two: The global minimum tax regime introduces unprecedented complexity, requiring calculations that evolve rapidly and demand precise, consistent outcomes.
- UK regulatory scrutiny: Domestic tax authorities are increasingly penalising organisations for low “risk scores” in their governance frameworks, with spreadsheet dependencies often flagged as vulnerabilities.
- Sustainability regulations: The EU Taxonomy on Minimum Safeguards specifies that companies must treat tax governance and compliance as important elements of oversight, and have adequate tax risk management strategies in place.
These examples make it clear: tax leaders must navigate stricter requirements with greater agility, transparency and accuracy.
The risks of Excel dependence
While Excel has its merits, its use in tax functions introduces significant risks:
- Operational risks: Uncontrolled complexity hidden in spreadsheets can lead to errors that cascade into financial misstatements or compliance breaches.
- Key-person dependency: When critical spreadsheet logic relies on the tacit knowledge of a single analyst, departures can disrupt workflows and create high hidden costs.
- Lack of audit trails: Excel lacks robust governance features, increasing vulnerability during audits.
- Resistance to real-time compliance: Manual spreadsheet processes are ill-suited to the instantaneous reporting demanded by modern tax regimes.
- Barriers to AI integration: Logic trapped in Excel cannot harness the transformative potential of artificial intelligence, leaving tax departments lagging in analytics and predictive insights.
Is it time for a paradigm shift? Enter centralised business logic
We believe the solution lies in refactoring Excel-dependent calculations into controlled, centralised frameworks that integrate seamlessly with ERP systems and specialist tax software. We have developed a novel approach that can harvest spreadsheet logic into easy-to-use, easy-to-understand and easy-to-navigate models:
- Ensure transparency and comprehensive audit documentation
- Achieve real-time compliance and adapt quickly to regulatory changes
- Unlock the strategic benefits of AI, enabling autonomous compliance processes and sophisticated analytics
- Reduce reliance on key individuals and facilitate smooth knowledge transfer
- Lower operational risks and costs
Recommendations for tax functions
Conclusion
The question is no longer whether Excel’s role in tax functions will change – it’s how quickly organisations can adapt. For tax functions in multinational corporations, the urgency to act is clear. By embracing controlled, centralised tax logic and leveraging AI-ready platforms, you can mitigate risks and turn compliance challenges into opportunities for operational excellence and strategic growth.
The future of tax functions is about greater transparency, enhanced agility and reduced dependency on Excel.
