The product should have a dedicated process to model tax liabilities

Description

Modelling tax liabilities in Corporate Performance Management (CPM) software involves modeling various tax scenarios, developing tax liability projections, and reporting on tax provisions following GAAP or IFRS rules. The software should have a dedicated process or module that accomplishes this.

Example Use Case

Scenario: An enterprise-level pharmaceutical company runs operations in several countries, each with its own tax laws and regulations. Tracking, forecasting, and modeling tax liabilities across all these different jurisdictions becomes a complex task.

Solution: The CPM software's dedicated tax modelling process allows the finance team to calculate tax liabilities based on the specific tax laws of each country. Through this, the company can forecast, plan and strategize its tax payments more effectively, thereby reducing potential penalties and tax burdens.

Considerations

This functionality is exclusive to enterprise CPM vendors as it is primarily purchased by large companies. When looking at these products, consider the long term maintenance of the rules and regulations inherent to tax planning. The systems that keep this updated on your behalf are going to be much easier to maintain over time. This takes the compliance burden off of your shoulders, at least for the underlying calculations.

Also consider how tax strategies can be modeled in the system. We're looking for more than just modeling out the liability. What structure saves you the most money? Can that be modeled? Can the system suggest approaches? Can we put different approaches side by side?

Questions to Ask a Vendor

• Cohesive Plans: How well-integrated is the tax modelling process with other financial planning, budgeting, and forecasting modules in the system? Can I see the results of tax modeling and our overall plan in the same model?
• Regulation Changes: How quickly and easily can the software adapt to changes in tax laws and regulations? Does your company update this for us?
• Support for Global Operations: How does the system handle tax modelling for companies operating in multiple countries with differing tax laws?