Tax Tech Tango: Balancing Innovation, Optimization, and Compliance
This post is by Dave Hafford from Thomvest Ventures - Medium
The recent decline in the public performance of the fintech sector alongside the broader market has caused a renewed focus on traditional measures of company health, such as retention and profitability. And as we think about what truly constitutes mission-critical software, the old adage comes to mind about life’s two great certainties:
Taxation has been evident in the earliest recorded human civilizations, with the first known taxes being collected in Ancient Egypt around 3000–2800 BC. While it’s unlikely that ancient Egyptians were navigating the complexities of international transfer pricing, it’s safe to say that taxation was likely an unpleasant but integral part of their government. Unfortunately, not only is that still the case, but tax planning, compliance, and optimization workflows are becoming increasingly complex with myriad different entities, jurisdictions, reporting standards, and facilitating technologies, all leading to a jumbled landmass of potential regulatory pitfalls.
To better understand the tax technology space, we spoke with corporate tax software executives, startups building disruptive solutions, tax lawyers, accountants, auditors, and bookkeepers to cover 1) the evolution of tax tech over time, 2) the incumbent landscape, and 3) the opportunities in the space going forward. Given this piece is somewhat lengthy, the key highlights are below:
- Taxation has always remained top of mind for both mature and growing organizations, and software hasn’t always kept up.
- Software managing tax compliance has evolved in three stages, the third happening now.
- Tax compliance is becoming increasingly sophisticated, and tax optimization is becoming (Read more...)