Robotic Process Automation In Tax Management

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Humans and robots can work together and can have the common goal to achieve while working in the same organization.

RPA bots in the financial services are cost-effective and are expected to diminish the risks as they make few mistakes and they need to work much faster. 

Rather than taking away the jobs of human accountants, RPA is set to mandate the tedious tasks for human accountants so that they can spare some time and focus on the activities which require human intervention. 

Tax appears as the main aspect whenever the accounting departments come to the limelight within any firm. 

What is RPA? And how will it benefit the firms?

RPA stands for Robotic Process Automation which is nothing but logically driven robots which executes its functions on structured data. 

RPA takes productivity optimization to the new heights by making some changes in the existing work and later reassigning it to the same employees to perform higher value activities. 

The bots which are capable of carrying out their tasks in an independent manner performs functions like interpreting, deciding, acting and learning.  

The capacity of Robots and process robot capabilities are as follows:

Robots :

  • Computer-based Software
  • Enables the automation of rule-based repetitive tasks
  • Accurately mimics the users
  • Work across various applications and functions

Potentiality of Process Robots :

  • Automates the data entry
  • Multiple system integration
  • Repetitive tasks
  • Process Reconciliation
  • Data validation and quality enhancement
  • Processing on the base of simple business rules 

RPA and its role in tax

The payment of tax in the overall accounts department is of high importance to the accountants as well as to the business owners. 

Process robotics can get applicable in every area of the tax function where manual, repetitive and time consuming processes are still used for producing results and even if  tax has integrated technological solutions for direct and indirect tax compliance and reporting.

RPA can perform activities which are related to the functions where direct and indirect t6ax both get applicable.

1. Gather tax data

  • Exporting trial balance from ERP systems
  • Exporting the trial balance which is needed to prepare tax return
  • Exporting fix assets ledger which is the subset of the ledger from the proper system
  • Exporting company’s specific data when required
  • Determining the tax payment status of all the employees

2. Review trial balance 

  • Review previous year accounts to make sure that the changes are been noted and it also ensures consistency
  • Analysing the account changes and evaluating the potential tax impact
  • Assigning the book basis accounts to tax basis accounts
  • Map book basis account number to tax basis account numbers
  • Reconciling intercompany transactions

3. Converting data into tax basis

  • Calculating tax differences
  • Apply tax differences to trial balances
  • Evaluating options which are available for the tax treatment of discrete tax transactions
  • Calculating tax appointments and adjustments
  • Complete and review tax return books

4. Preparing Returns

  • Assigning tax account to related tax form lines
  • Filling out tax returns with proper utilization of tax workbooks
  • Fill out remaining tax return line items and information fields
  • Reviewing tax returns
  • Submitting tax returns and related payments

5. Accounts for taxes

  • Booking current tax accounting entries
  • Calculating deferred tax
  • Reviewing the calculations made in deferred tax
  • Booking deferred tax accounting entries

6. Addressing tax enquiries 

  • Reviewing audit enquiries in an Ad-hoc process
  • Developing audit response strategies
  • Gather relevant information to audit strategies
  • Respond and close the audit processes

RPA for shared service centres

The tax functions will have leverage over the shared service centres which manage the increasing volume of activities which are related to compliance at a lower cost. 

The tax use of shared service centres for the collection of data and perform completely falls under three of its categories.

  • Never used a shared service
  • Limited use of indirect sales and direct sales
  • Dissatisfaction with a shared service centre approach for tax

Managing organizational structure and risk

There are many organisational structures and ways of aligning the responsibilities which is related to the data and activities which are required to meet the tax requirements.  

In almost every case, Tax is the only factor which is highly involved. 

In every aspect of the function. However collecting data and its routine tax activities are the main responsibilities of another function which includes finance and where leveraging shared service centres.

Tax is not directly involved and it becomes quite critical for tax to come into collaboration with all other functions to make sure that all the processes which egts associated with the tax-related activities gets into proper execution in a complete manner which diminishes the risk for all the tax functions and the organization at large. 

With continuous advancements in technology tax should now look and reconsider taking all the activities of direct, indirect taxes and taxation to reconsider how RPA will efficiently perform. 

The tasks which involve large transactions and high volume of transactions, repetitive manipulation of data and communication along with other enterprise systems which efficiently perform at a minimal rate.

RPA can get deployed within and without a shared service centre. The adjacent graphic illustrates the example of direct and indirect activities of tax that RPA can keep on performing within the same context of a shared service centre. 

Concluding Lines

Developing a roadmap before the implementation of RPA will surely bring positive rewards and will make the functioning of the overall tax process much better. 

The RPA tools and its functions will ensure that the company will have reports and tax payments which are error-free and the conditions are met before the deadline. 

About the AuthorParth Patel is a serial entrepreneur and CEO of SyS Creations an RPA provider which is a top provider of RPA. Operating the IT Infrastructure of SMEs and startups keeps him on his toes and his passion for helping others keeps him motivated

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