The Future of Tax Reporting
BEPS (Base Erosion and Profit Shifting) 2.0 refers to the next iteration of a plan by the Organization for Economic Co-operation and Development (OECD) to address tax avoidance by multinational companies.
According to Bloomberg Tax:
"Multinational enterprises are facing new and complex tax rules stemming from the OECD and G-20 countries’ BEPS 2.0 project—particularly the project’s Pillar Two 15% global minimum tax, which is set to apply to multinational groups with global revenue of more than €750 million ($829 million). Enforcing these rules will require unprecedented global cooperation between tax authorities, and implementation approaches likely will vary among jurisdictions adopting the rules, making compliance a challenge and creating the risk of controversy."
The absence of a definitive timeline notwithstanding, eventual compliance with BEPS 2.0 is inevitable. Accordingly, it’s not too soon to start considering the means by which to produce and submit the required financial and tax reports.
Hint: It’s Not Excel
While Excel can be used for basic data management and reporting tasks, it’s inadequate for BEPS 2.0 reporting. Here’s why:
- Version Control. Because BEPS is complex and multi-faceted, Excel can’t manage the massive data streams in a systematic and organized manner. Moreover, with multiple users working on it globally, Excel doesn’t have a solid mechanism to manage comprehensive calculations, track changes in near real-time with multi-user accesses, and control security. PaPM helps you work on BEPS with global and local teams in a more organized and secure manner with its in-built process orchestration capabilities.
- Data Volume. With more than 250 data points identified by the OECD and countless more being discovered, Excel struggles to effectively manage, enrich, and analyze this information. To ease the transition to BEPS, maintain the requisite volumes of data, and efficiently adjust that data year on year, Excel is a good starter but reaches its limit very soon, which is exactly where a robust solution is needed.
- Changing Regulatory Requirements. Staying compliant with regulatory updates across jurisdictions is crucial for accurate reporting. With regulations constantly evolving, keeping track of changes can be daunting. We recognize the importance of effectively managing regulatory updates. Our subject matter experts work tirelessly to stay ahead of the curve, ensuring our clients are informed and equipped to navigate regulatory changes seamlessly.
- The Auditors. Organizations must demonstrate detailed audit trails for activities, processes, and workflows. Excel does not cut it with regard to strong documentation features to ensure compliance efforts are captured in detail. Nor does it offer real-time monitoring capabilities with activity, process, and user logs maintained at every step. Being able to readily provide standard and customized reports provides the compliance evidence to ensure smooth audits.
- Compliance Filings. This is the ultimate test for any tax technology solution — generating reports that can be submitted to revenue authorities for compliance filing and where Excel will fall short. Sure, you can probably program Excel to do it once, but what happens when the rules change? You have to start all over.
Bottom line: Excel can be useful for basic financial reporting. But it’s unsuitable for the complexities and regulatory requirements associated with BEPS 2.0 reporting.
We Know a Better Way
By using SAP Profitability and Performance Management (PaPM), you can track your changes and workflow, assign user roles and security controls, and manage massive volumes of data — systematically and in an organized manner — even with multiple users across the globe. And with more than 250 data points identified by the Organization for Economic Co-operation and Development (OECD) and more on the way, PaPM will keep you on track and give you peace of mind.
Beyond that, PaPM ensures you’ll be current with all regulatory mandates across jurisdictions. And with its transparent audit trails for activities, processes, and workflows, your compliance efforts will be captured in detail, and your auditors will be as happy and confident as you are. PaPM also provides real-time monitoring, process and user logs, and standardized and customized reports.
Our team at msg global is here to support your entire process. With technical excellence, subject expertise, and in-house teams working round the clock to monitor international developments, we ensure a positive experience for BEPS 2.0 Pillar 2 and Country by Country Reporting (CBCR).
In short, PaPM and msg global will make your BEPS 2.0 compliance and country-by-country reporting just another day at the office.
For more information about our BEPS 2.0 reporting capabilities, please click here.
