Major Corporations Slow To Adopt Integrated Tax Reporting

by Robert Lee, Tax-News.com, London

18 May 2006

Tax departments in some of the world’s largest corporations are struggling to make the business case for integrated tax reporting systems, according to the findings of a recent survey.

Despite increasing pressures for real-time information, over 60% of tax departments are still using internally-developed, stand-alone spreadsheet programs to keep track of tax matters, with only 19% using software linked directly to financial accounting systems, the survey found. It was conducted by accounting firm KPMG at a Berlin tax conference attended by senior tax executives from 120 multinational corporations.

When asked what they considered were the main problems with their current technology, almost 75% reported that they lacked links to internal accounting systems or better linking of tax technology tools.

While just 6% complained about the cost of new systems, nearly half of the respondents stated that they needed budget increases for tax technology, or a better understanding from their finance colleagues of the tax department’s needs.

According to KPMG, the need for more integrated systems is being driven by several factors, particularly the requirements of tax authorities and of the company’s risk management policy.

“Tax and its associated risks are clearly moving up the corporate agenda worldwide,” observed KPMG’s Global Head of Tax, Loughlin Hickey.

“Spreadsheets are fine up to a point, but they do carry with them a risk of mistakes, which requires strenuous quality control procedures. The move to more integrated systems is a natural development in response to more strenuous reporting requirements across the world," Hickey added.

"It is an investment which all major corporations should be considering with care," he concluded.

Recommended