If your teams are battling spreadsheets, you are already behind with Pillar II. Tax and finance teams are already stretched by the granular, entity-level data requirements of Country-by-Country Reporting (CbCR). Now, Pillar II (the global minimum tax) will introduce over 150 new data points per entity. In practice, this means collecting, reconciling and reporting thousands of data points. Trying to handle the scale and complexity of global tax compliance in a spreadsheet puts you at risk of penalties, late payment interest and reputational damage from non-compliance.
Why Spreadsheets Fail
We regularly hear that in-house tax teams have a strong reliance on Excel for their global compliance, but are becoming increasingly frustrated by its limitations for increasingly large and complex tax legislation. Typical issues include:
- Data silos and duplication – Disconnected spreadsheets quickly get out of sync with files living in multiple locations, versions and inboxes, creating process redundancies. Data is siloed in spreadsheets, so consolidation becomes time-consuming and painful.
- Manual error – Thousands of data points and dozens of interlinked formulae means endless opportunity for errors, one typo can break a spreadsheet.
- Lack of audit trail – Spreadsheets offer almost no visibility into how a number was calculated or which inputs changed. They can’t enforce governance or controls making it hard to defend figures.
- Scalability limits – Excel isn’t designed for enterprise‐wide data. Very large spreadsheets can crash or become unusably slow.
While bespoke spreadsheets may work for a single piece of analysis, all these issues make spreadsheets an ineffective store of data for tax compliance. Spreadsheets will lead to the loss of valuable time for tax and finance experts, which could be better spent on strategic analysis, forecasting and process improvements instead of fixing Excel and reconciling data.
Why You Need a Standardised Tax Solution
Worldwide, tax authorities and governments are raising the bar for tax transparency by increasing disclosure and reporting requirements. The risks of falling behind with Pillar II could be significant, including:
- Permanent forfeit of safe harbour relief, meaning far more extensive computations
- Penalties and late payment interest
- Reputational damage and ongoing audit scrutiny
The introduction of Pillar II is not simply a challenge of volume; it introduces new tax bases and adjustments that do not exist in most ERP or tax provision systems. It also requires non-financial metrics, which will exist outside of core financial systems. Ensuring the data is consistent, reliable and auditable at a global scale adds a further layer of complexity. For groups currently utilising multiple source systems, the challenge is multiplied.
Standardised tax software transforms your processes by replacing fragile spreadsheets with a robust data platform that keeps everything consistent, up-to-date, and auditable. With many overlapping tax requirements, it makes sense to have a single source of truth for tax data. Many of the pain points of battling large and complex spreadsheets are also removed, saving time and allowing teams to focus on where they can add value to the business.
Act Now
It is critical that companies get this right in year one. The next step for in-scope groups is to assess your organisation’s tax data readiness. Praesto offers a Data Readiness Workbook that allows you to walk through the key Pillar II data points and identify any gaps in your current systems.
Contact us today for assistance assessing your current systems and to hear about what tools are available for compliance and reporting from our tax and systems specialists.