Use case: Insights suite

‘’Strengthening tax control through the deployment of data-driven and technological solutions in the monitoring and testing of processes that constitute the Tax Control Framework.’’

Client challenge

A large trading company has the desire to pay continuous attention to the further development of their tax control procedures. This is also important because it fulfils the requirements of the Horizontal Monitoring regime of the Dutch Tax Administration, ‘Doorontwikkeld Horizontaal toezicht’.

Moreover, tax risk management within the organisation is mainly reactive and incident driven and does not yet follow an optimal approach supported by technology.

Approach

The Smart Automation and Quantitative Solutions team has developed a plan of approach with the organisation to monitor and test the Tax Control Framework from the perspective of VAT, corporate tax and payroll tax in the Netherlands, relying as much as possible on automated data analysis solutions.

In order to obtain an accurate image of the current operational effectiveness of the Tax Control Framework, a data analysis was carried out on the basis of automatically extracted data from the ERP system with the use of extraction scripts. For this analysis, the Smart Automation and Quantitative Solutions team has developed several analytical tools known as the Insights Suite, that address specific tax types and sectors. Within PwC’s Insights Suite, data analyses are available for a wide variety of control topics. Based on this analysis, insight is provided into (potential) risks and opportunities to improve the client’s processes and administration.

Result

This approach leads to (new) insights with regards to the accuracy of tax returns, but it also identifies both opportunities for optimisation on a process-level and points of attention that require further action. Finally, it provides a sense of comfort that the Tax Control Framework has operated effectively in investigating risks over a certain period of time. The activities as well as the final report have been shared in a transparent way with the tax authorities in line with the framework of horizontal monitoring. For the following year, the integrated sampling is in place and in accordance with the tax authorities' approach.