Some 92.4 percent of firms have admitted that their system upgrades and integration are not set up to support fast changing tax laws, a SIX survey has found.
Less than 10 percent of respondents to the survey have finished setting up processes for data collection from clients and counterparties.
Of those firms surveyed, more than half (55.8 percent) of respondents said cross-border taxation issues were influencing their organisation’s agenda.
As a result of this, tax data management is a key focus for financial institutions today, according to SIX.
The survey found that the greatest concern among organisations regarding tax compliance is managing the complexities of regulations across different tax jurisdictions.
Meanwhile, key tax regulations causing concern include the Fair and Accurate Credit Transactions Act, with over a third stating that this law posed the greatest challenge to meeting data compliance needs.
More recent tax changes requiring firms to make imminent changes to tax data, including Internal Revenue Service (IRS) 871 (m), IRS 305 (c), and the automatic exchange of the Common Reporting Standard, are big hurdles for certain firms.
According to SIX’s findings, firms are not prepared to react to these rapid changes with the processes they currently have in place.
Jürg Stalder, senior product manager at SIX, said: “Tax regulations have changed immensely over the past few years and increased complexity around these new regulations have posed new challenges for organisations.”
“Firms are under pressure to improve their tax data management processes and, with the speed at which regulation is evolving, it is unsurprising that our survey finds many underprepared.”
Stalder continued: “The old methods are no longer fit for purpose. Firms must look for new ways to comply including automation and centralisation. They must look at this as an opportunity to not only improve their data management processes but also use data more effectively and strategically throughout their business activity.”
.jpg)