chapter 9: tax analytics Flashcards
(20 cards)
what tax questions can data analytics help with
descriptive
“what is the most amount of tax paid each year by entity or tax category?”
(summary statistics, ratio analyses, tax kpi’s)
what tax questions can data analytics help with
diagnostic
“why do we pay a higher effective rate than industry average?”
(performance comparison (past, other, competitor, industry, drill down)
what tax questions can data analytics help with
predictive
what is the amount of R&D tax credit we expect to qualify for in the future?
(forecasts: time series, analyst forecasts, competitor
what tax questions can data analytics help with
prescriptive
if certain tax legislation passes, what level of exposure (additional tax) might the company face?
(tax planning based on WHAT-IF ANALYSIS, sensitivity analyses)
mastering data through tax data management
tax data at companies
most tax data comes from company’s own financial systems
tax data marts filtered databases focused only on tax relevant data
transaction accounting records from data warehouse
mastering data through tax data management
tax data at accounting firms
accumulate and use client tax data to deliver services
their tax marts are full of client information
maintain tax data marts of client information which is usefull for planning oppurtunities and benchmarking
mastering data through tax data management
tax data tax authorities
reconcile financial reporting data & tax-return data to flag discrepencies
tax data visualizations
dashboards
aggregate KPIs in one view, helping monitor complience and performance
tax data visualizations
geographical map
visualize tax data across locations
tax data visualizations
graphs
help spot patterns and outliers in tax figures at a glance
TAX KPI’s
tax cost KPI’s
= measure the amount of tax paid and it’s impact
effective tax rate
cash taxes paid
deffered taxes
TAX KPI’s
tax cost KPI’s
effective tax rate
overall tax as a % of pre-tax income
TAX KPI’s
tax cost KPI’s
cash taxes paid
actual cash outflow for taxes
TAX KPI’s
tax cost KPI’s
deffered taxes
= uitgestlede belastingen
changes in deffered tax assets/liabilities
tax risk kpi’s
= measures tax uncertainty and compliance risk
() tax audit adjustments:
how often and how much errors are found during audits
() disputed positions
number of tax issues, re-filing or connections
() penalties & fines
for late filing or tax errors
tax sustainability KPI’s
= measure performance consistency over time
1) ETR over time –> stable? increasing? decreasing?
2) amount of disputes (audits with problems over time-
declining: sustainable compliance
tax efficiency & effectiveness KPI’s
= measures how well the tax function operates
1) technology and training –> is the tax team skilledand using modern tools?
2) time allocation –> more time on STATEGY (vs complience)= more efficient
3) satisfaction & turnover –> happy team + low turnover= strong stable departement
the different tax KPI’s
- tax cost KPI’s
- tax risk kpi’s
- tax efficiency & effectiveness KPIs
- tax sustainbility kpi’s
- permanent differences kpi
permanent differences KPI
differences that never reverse
ex: fines, meals
what if scenario in tax planning
how is a what if scenario used in tax planning
stimulates different tax outcomes based on changing inputs
ex: lower tax rate and + 5% earnings
helps forecast BEST-CASE and WORST-CASE tax exposure
