Big data is revolutionizing the tax landscape, driving a significant transformation on both sides of the equation – for tax authorities and for businesses. Big data analytics allows tax authorities to analyze vast amounts of information from diverse sources, including financial transactions, social media data, and public records. This enables them to identify potential tax evasion and avoidance more effectively, focusing their resources on high-risk areas.
Secondly, Big data analytics is revolutionizing how we approach various processes, offering unprecedented precision, flexibility, and insights. By automating tasks and optimizing workflows based on data insights, big data can significantly streamline operations and improve efficiency.
By analyzing taxpayer data more efficiently, tax authorities can conduct more targeted and data-driven audits, reducing the burden on compliant taxpayers and increasing the effectiveness of audits on non-compliant ones. Big data analytics allows for real-time monitoring of tax compliance, facilitating quicker identification and response to emerging tax avoidance schemes.
Companies are automating collection of raw, unstructured tax data, sending of tax documents to contractors and filing of forms. They are able to send it to correct tax authorities, mainly by huge corporations / MNCs who has to meet varied compliances in different geographies. Besides this, pulling data from different sources into a *single data warehouse* stops manual data entry and allows the company to transform and clean the data, if need be. The processing time is thus considerably reduced, side by side accuracy being provided in a closed system.
Big data analytics plays a great facilitating role in tax controversy too – use ML model to predict the outcome of the case. Predicting patterns out of the previous tax cases and using ML model to develop a more effective litigation strategy would be few of the other added advantages.
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