For today’s corporate tax professionals, the challenges now seem to come without letup. Political developments that threaten trade and tax regimes. Mandates from executive management to do more with less. The gig work trend. A wide range of new technologies upending how businesses compete in almost every facet of their operations. And now, in the U.S., a dramatic realignment of the federal tax code that lowers the corporate income tax rate while eliminating some long-tenured deductions—regulatory details to follow.
If ever there was a time for corporations to rethink how the tax function is organized and managed, this may be it. The good news? Many of the same disruptive technologies that are turning business on its head can help tax departments pivot to meet their own challenges, from operating more efficiently to enhancing their company’s global tax profile.
Specifically, tax departments today have an opportunity to leverage big data and artificial intelligence applications like machine learning to infuse their operations with intelligent automation—from handing over repetitive and mundane activities to software “robots” to bringing new speed and accuracy to high-value undertakings like complex, labor-intensive tax planning activities.
The potential applications are numerous, but consider by way of example the challenges corporations face in the U.S. in taking advantage of the federal research and development tax credit, once expected to expire but ultimately preserved in last year’s Tax Reform and Jobs Act. Although the credit is exceedingly valuable—the U.S. Treasury estimates its value at $163 billion for fiscal years 2018-2027—securing it can be a laborious process as tax departments struggle to provide the Internal Revenue Service with sufficient evidence of qualifying activities. This credit computation and filing process typically requires R&D personnel to respond to sometimes numerous entreaties for supporting documentation—contracts, e-mails, slide decks, and more—impinging on their core mission of inventing new technologies and products.
Today there’s an alternative—a new service designed to streamline the R&D tax credit claim process. KPMG Research Credit Services with Watson melds the specialized knowledge of the firm’s tax credit professionals with artificial intelligence capabilities from IBM. This new service automates much of the qualitative analysis required to support an R&D tax credit claim by uploading and reviewing the relevant structured and unstructured data and then comparing what it finds against tax rules.
The end result is more thorough and higher-quality documentation for the IRS, along with lighter demands on the client’s internal tax and R&D professionals.
Using intelligent automation this way is a dramatically new approach to problem- solving for tax departments, which in the past have had to muscle their way through such challenges by adding staff. It’s also just one example of the way we’re taking advantage of intelligent automation at KPMG, both internally to improve our own processes and services and externally to help our clients sharpen theirs. And, we’re doing it not just in tax but across a wide spectrum of business activities, including sales, marketing, human resources, finance and accounting, and operations.
Tax departments today are endlessly challenged by shifting laws, regulations, and court cases across multiple jurisdictions. By embracing intelligent automation, they can better meet those challenges and play a bigger role in their companies’ success.