Digitization Of Taxes: The Roadblock Facing Small And Medium Enterprises (smes)

By Author: Yantra Inc
Total Articles: 39
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You might be wondering where we stand today when it comes to tax digitization for businesses. Well, it’s a mixed bag, my friend. Different regions around the world are at various stages of adoption. A recent study found that while 80% of C-suite leaders express interest in investing more in tax technology, only 36% are making substantial investments to advance their tax functions [KPMG]. In Europe, for instance, there has been significant progress, with many countries implementing digital tax systems. Meanwhile, in Latin America, some countries are also moving towards digital tax solutions. However, when it comes to SMEs, there’s quite a gap compared to larger companies.
Uncertain return on investment (ROI) and data management burdens are among the barriers hindering this adoption [KPMG]. A whopping 64% of Chief Technology Officers stated that their tax personnel spend more time collecting and preparing data rather than performing valuable tax analytics [KPMG]. That’s a lot of time that could otherwise be spent on more value-added and strategic matters!
Hindering Business Growth: Unveiling the Challenges for ...
... SMEs. Now, let’s delve into the hurdles slowing down tax digitization, especially for SMEs.
1) The Regulatory Labyrinth
Picture this – the United States boasts more than 13,000 tax jurisdictions, each with its own set of rules, regulations, and compliance requirements. It’s like navigating a maze blindfolded! This fragmented tax landscape can leave SMEs scratching their heads, trying to decipher the intricate web of tax codes that vary from state to state. According to a recent study by Yantra, a notable player in cloud software integration and a leading management consultancy, a staggering 50% of their clients find themselves grappling with the complexity of multi-jurisdictional tax compliance [Yantra].
2) Budget Constraints
Money propels the world, but what if there isn’t enough to fuel the tax digitization journey?SMEs often operate with tighter budgets compared to their larger counterparts. Implementing new tax technology systems, training staff, and adapting to digital workflows can be financially daunting. As a result, investing in advanced tax technology might not always be feasible. A study by KPMG highlights that nearly half of respondents (49%) cite uncertain ROI as a barrier to investing more in tax technology [KPMG].
3) Mindset and Cultural Shift
Change is hard, and changing the way you’ve always done things can be even harder. Many SMEs have been accustomed to traditional methods of tax compliance, involving manual data entry and paper-based processes. Shifting to digital platforms and embracing new technologies requires a shift in mindset. It’s not just about the technology itself; it’s about changing the organizational culture to be more open and adaptable to technological advancements.
4) Leadership Focus and Priorities
Leadership plays a pivotal role in steering a business toward innovation and growth. However, in the case of SMEs, leaders often wear multiple hats, juggling various responsibilities. This can result in a lack of dedicated focus on tax digitization efforts. While larger corporations might have specialized departments to handle tax matters, SMEs might find themselves allocating limited resources and attention to tax technology initiatives.
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