Imagine it’s 4:30 on Friday afternoon, and you’re about to finish another hectic week in corporate tax. Dealing with short timelines and shifting guidance has left you ready for the weekend. Then, the email hits your inbox. It’s from your VP of Tax looking for answers to several scenarios, including:
- How will we be impacted by proposed changes to global intangible low tax income (GILTI)?
- What effect does the offshore production tax have on tax expense?
- Are we maximizing the benefit of repatriation activities?
And oh, by the way, your VP needs answers yesterday.
A typical reaction to questions like these would be grabbing a spreadsheet and copying and pasting data to respond as quickly as possible. While this fix works in the short term, there is a better way.
Use a more holistic and value-added approach by incorporating the following three points into your response plan.
1. Clarify Objectives
Start with a straightforward question: Is the request for planning or for analytics?
The distinction is important as it influences the outcome of what we produce. If we are trying to analyze what has already happened, we need analytics. If we are trying to estimate what will happen, we are planning.
Analytics require detailed information down to the transactional level. For planning, you need to provide summarized views of data with an emphasis on modeling hypotheticals.
Tax teams that deliver relevant data for both planning and analytics yield richer, more accurate results. To do this, however, you need unfettered access to the right data.
2. Get the Right Data
To get the data you need, store common data in a secure and easily accessible central location. Without common data, you are left integrating data from different siloes, which not only risks inaccuracy but increases inefficiency.
Next, query your common data to find the exact information you need for comparative analysis. In addition to slicing through large amounts of information quickly, queries can be saved and repurposed—you don’t have to re-invent the wheel for similar requests. Redirecting time-savings to analysis allows your team to add more value.
Further, by establishing and saving baseline queries, you can reuse the data for other planning scenarios. For example, to maximize the benefit of repatriation activities, look to historic E&P to analyze PTEP. By running data inquiries against historical E&P, you can analyze GILTI, Sub-part F, and dividend distributions—as well as underlying data that impacts these calculations.
As with the other two scenarios above—whether changes impact GILTI or an offshore production tax—you’ll need the ability to query your as-filed data, so you can copy that data into planning scenarios. This approach generates simultaneous benefits of repurposing existing data without risking changes to it. You’re also free to introduce other changes from proposed regulations (higher tax rates, added offshore taxes, changes to GILTI, etc.) and analyze this data with the right solution.
Now that objectives are clear and you have the right data, you want to apply the best solution to produce the requested planning scenarios. And to reiterate, without accurate data, results won’t matter!
3. Apply the Right Solution
A common next step might be to copy the data into a spreadsheet and send it back to the executive asking for answers. While the copy/paste approach may work at first, beware the pitfalls. Once data is extracted and placed somewhere else, it becomes static. The spreadsheet you sent last night may already be outdated—and constant corrections create rework and risk.
A better approach is to access data for the planning scenarios above using a live connection into source data needed to create those scenarios. Define the connection points based on the desired outcome, and determine who will be consuming the data. Consider that an executive may want a high-level view with manipulation of a few data points, while a manager may be looking for details. In either scenario, you’ll need the right data and the right tools to access that data.
Here are two solution categories, along with key considerations for each:
Excel-based connectivity solutions pull live data from a database, providing a real-time connection. This connection prevents users from grabbing static data and copying/pasting into Excel. A great method is to work with a refreshable connection using tax technology that provides two-way dataflow between Excel and the tax database.
API-based connectivity solutions offer a deeper level of integration with point solutions. Open Database Connectivity (ODBC) drivers are a common type of API used. These drivers enable the connection, giving you sophisticated query and reporting capabilities from tax solutions and source systems, including the ability to:
- Build detailed analytics, refresh charts and dashboards, and visualize data in executive-friendly ways—all in real-time
- Push and pull data from a common tax repository
- Analyze and report on workflow status, adjustments, E&P, BEPS Country-by-Country, and more—quickly and accurately
- Define your own queries and reports
In addition to choosing the best solution for optimal analytics and planning strategies, it’s equally important to leverage your planning templates for future use. As regulations continue to change, requests for analytics and planning scenarios will likely increase—so why start from scratch with each request?
We hope these three points help you execute better strategies. The right approach ensures you have data at hand to react agilely next time you get a Friday (or any day) request from leadership.