Navigating 2024: Essential insights from Synergy 2023

Once again, our Baker Tilly team was proud to attend the Thomson Reuters Synergy 2023 conference and sponsor at the platinum level. As we settle into 2024, our team of tax and technology professionals have outlined a few of the key updates and critical sound bites from our week of Synergy excitement that may have a lasting impact on your organization.

Technology is an ever-changing landscape, and this year we continued to witness that at Synergy. From tax law changes to plan for (such as Pillar Two), Artificial Intelligence (AI) increasing the ability of professionals to attain more consistency and a higher frequency of updates, an increased utilization of Alteryx/connectors/APIs, and the use of graphical representation of our results, it was another exciting year.

As you review these trends, know that we are here to help whether your needs are related to tax technical matters or the many aspects in which we can help drive efficient utilization and maximization of technology, including Thomson products, within your tax functions.

Preparing for tax law changes

The introduction of Base Erosion and Profit Shifting (BEPS) 2.0's Global Anti-Base Erosion (GloBE) rules marks a significant shift in global taxation, affecting multinational enterprises (MNEs) with revenues of at least €750 million. The rules set a 15% global minimum tax (GMT), which according to a more recent publication (OECD Taxation Working Papers No. 68, ‘The Global Minimum Tax and the taxation of MNE profit,’ Jan. 9, 2024), is estimated to increase corporate income tax (CIT) revenues by $155 billion to $192 billion on average per year. The computation contains nuanced rules and intricate calculations that could lead to unexpected “top-up tax” liabilities for any variance between the GMT and the calculated effective tax rate under the GloBE rules. Many countries are legislating (or have already legislated) these rules into local law, which more generally may be effective beginning in 2024. MNEs should act now to assess the impact of these new rules and local laws. Importantly, the new tax framework may impact even MNEs with effective tax rates initially thought (before applying the GloBE rules) to be comfortably above the 15% minimum rate, making compliance a challenging task. In almost all the tax department surveys taken in 2023, Pillar Two was cited as a major source of potential risk for MNEs.

Any tax reporting and transfer pricing technology, likewise, must natively incorporate the new framework and must be capable of modeling financial scenarios that consider a range of complicating factors, including different financial forecasts and new initiatives in key jurisdictions. Tax departments need to invest in technology tools that can accurately and timely integrate tax related data across their organization, whether to calculate their global tax liability, comply with Pillar Two and/or assess indirect taxes owed in different jurisdictions.

Thomson Reuters + Orbitax

With more than 100 new data requirements as a result of the GMT, Thomson is partnering with Orbitax to streamline the process. Orbitax Connect has the ability to connect to solutions with available APIs and comes with 90 out-of-the-box connections to ERP systems.

Tracking compliance obligations and taxes from a global perspective can be overwhelming, but navigating the GMT before it becomes more fully effective is a prudent next step for any MNE at or approaching the reporting thresholds. Your company may only be a transaction away from GMT reporting and taxation.

Artificial intelligence – A driving force

As organizations continue to optimize their structure, processes and resources, leveraging AI will allow teams to focus on activities that bring value to the organization rather than on processes that are consistent and repeatable, such as e-mail communication. Typical e-mails center around data and information requests, status and progress updates, and meeting invites. Leveraging AI to automate e-mail communication can boost efficiency and simplify internal controls.

Imagine a scenario where employees effortlessly send work updates, progress reports and information to relevant stakeholders. AI-powered tools can analyze recipient responses, optimize timing of e-mails and offer insights into effective communication strategies, allowing employees to focus on strategic tasks. AI may be used to study historical e-mail communications, create an inventory of data requests, task lists, calendar availability, questions and responses.

Based on agreed upon timelines and checkpoints, automated follow-ups can be sent out. These status updates allow management to avoid spending significant time and effort chasing progress reports and gathering information. All of these elements can lead to a reduction of stress on employees from preparing and providing timely updates.

For business partnering, AI can assist with identifying potential collaboration opportunities by analyzing communication data and suggesting suitable matches based on criteria such as departmental needs, industry alignment and historical interactions. This not only accelerates partnership development but also fosters connection and creates synergies within the company.

As AI continues to become more advanced, companies can use AI’s ability of machine learning, natural language processing, automation and generative AI to give their employees another tool to become a modern-day professional.

AI at Thomson Reuters

Thomson Reuters has elevated the efficiency of tax research with the incorporation of an industry-leading AI-powered algorithm in their Checkpoint Edge platform. The platform's user experience is elevated through the seamless integration of AI, cognitive computing and machine-learning technologies. Checkpoint Edge delivers a powerful and intuitive experience, providing targeted results based on full-phrasal, natural language questions, enabling users to obtain more precise information with reduced browsing time and typing efforts. Additionally, the inclusion of concept markers allows for the identification of related or beneficial re-sorts of results, while snapshot results offer quick answers to unfamiliar topics. This ensures tax professionals can find the most accurate answers faster so that users can spend less time doing research and more time on value-added tasks.

Let’s get connected

As tax practitioners, we spend so much of our valuable time comparing results to ensure our calculations and records are aligned. From work papers to returns, and returns to reports, and reports to our C-suite, and our C-suite to investors, the myriad of follow through seems to be never ending.

Partnering with Alteryx through data connectors makes handling and using data easier, improving processes like data collection, transformation and loading for better reporting and analysis. Alteryx's data connectors seamlessly import data directly into Thomson Reuters ONESOURCE solutions, simplifying the integration process and making data utilization more efficient. This collaboration ensures that important data is easily accessible, providing essential insights when needed through the reporting functionality within ONESOURCE. Additionally, a well-designed data import process into the tax software not only aids in minimizing human errors but also saves time that would otherwise be spent on manual data entry.

One of the recent releases from Thomson is the ability to connect the software to your work papers via APIs. These APIs can pull and push information from your work papers to any line on a tax return. The real-time aspects of these updates can have an immediate impact and increase your control processes with respect to expedited validation.

Visualizations of value

We are all swimming in data which, at times, makes it hard to comprehend the full story the data is telling us. So how do you help your teams and stakeholders understand, interpret and take action on the volumes of data we are presented with every single day? Enhanced data visualization. Thomson Reuters has created solutions to make it easy to leverage complementary tools such as Power BI to create visually enhanced dashboards., Users can employ these automated visualizations to present tax data in a more interactive way and interpret the volumes of tax results in a much more digestible manner. In addition to pre-created dashboards, Thomson clients can leverage the data connectors in Power BI to connect to different reports from their software, enabling users to build custom reports unique to their business needs.

Getting started on your 2024 tax technology goals

To help you get started, we have developed a short survey that helps you identify potential technology and process risks within your tax department. Our complimentary Strategic Tax Navigator survey takes less than 10 minutes to complete and offers you immediate, detailed suggestions for how you could proceed.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.