Utilize Palantir to collect and structure global data

Tax regulations drive the need for increased quality in legal entity management and master data

25 May, 2022



The tax department manages many different processes where data control related to legal entity management and the legal ownership structure (Master Data) is vital.

There are an increasing number of Tax-related obligations that require groups to file and disclose more data than ever before. Internationally the focus is on Corporate Tax Transparency, with the OECD’s BEPS initiative being adopted by many countries. These initiatives significantly increase the burden on Tax functions to compile and keep track of data at a detailed level and make it available to tax and other authorities.

In addition to the global imperatives, we are also witnessing an increase in regional and local initiatives. The EU has introduced mandatory disclosure and proposed making BEPS Country by Country reporting (“CbC,” BEPS Action 13) publicly available.

With new regulations such as Pillar2, the importance of being on top of this data is getting urgent. In the case of Pillar2, data collection has to be made on an entity level, which requires complete control of your entities, information around the entities, and changes of ownership to perform the required compliance tasks.

These additional obligations place increased responsibility on a modern tax function to implement efficient solutions to gather, store and analyze data which is typically challenging to get hold of through normal financial reporting processes or other means. This regulatory development has created a global trend to be in control of this data centrally at the headquarters level.

The challenge

Accounting systems are typically not up to the challenge. The primary source of information for managing this data is usually the group’s accounting system and the financial reporting process, including tax reporting.

Often the corporate structure found in the accounting system is based on the operational or line of business structure and does not reflect the legal entity/ownership structure, which is required for most processes within the tax domain. Compliance processes often require historical data, which, in an accounting system, typically is not structured so that it can be used without a lot of manual adjustments.

A system solution, which creates a bridge between the legal entity and operational structure, can provide a necessary tool, allowing data to be gathered and analyzed on a legal entity basis. In addition, the essential data on permanent establishments often may not be found in an accounting system and therefore needs a separate process to be kept accurate and current.

Standalone entity management systems

In discussion with multinational groups, we often found that they license legal entity management (Master data) solutions or have built an in-house solution. In most cases, these systems are managed by the legal department and are thus developed to meet legal needs and not the needs of a tax department. The tax department often does not get all the necessary data; it is not structured to meet tax needs and is not collected in time. Thus, the tax department needs to analyze the information and adjust and complement it before using it. Therefore, a lot of unnecessary work is spent securing, analyzing, and structuring data.

Standalone tools for different tax compliance processes

When discussing data collection with the head of tax, we often notice that it is common that the tax function has implemented standalone compliance tools that they populate with Master data from other sources. In many cases, this data is transferred to these solutions more or less manually. Finding the data and getting it structured and validated is, in that respect, very time-consuming.

Blikas legal entity management solution

To be compliant in the rapidly developing regulatory landscape, the head of tax must implement a secure and efficient process for updating entity data and the legal structure. Using a modern and user-friendly IT solution is vital to achieving that. When evaluating such a solution, it should be able to perform the following.

1. Gathering data relevant for tax and presenting this data for tax purposes in a suitable format.
2. Automate the use of this information in different tax processes.
3. Provide a flexible structure for collecting data needed in the new regulatory landscape.