Three-quarters of organisations fail to automate excise tax - report

The research reveals that excise duties typically contribute a staggering 10% of annual government funds, yet new research reveals vast resources are being wasted by organisations struggling to keep pace with hundreds of global regulatory changes each year, contributing to inefficient management of these taxes.

The report finds among other things that 73% of organisations rely on ERP software not designed to manage excise tax; 15% actually use spreadsheets to produce excise returns; 65% are using internal resources to keep track of changing legislation; Industry ‘Leaders’ are 45% more likely to have an excise tax engine; and 22% of these improved the time taken in addressing tax errors over the past two years.

The study notes that 73% of organisations rely mostly on their ERP solutions for excise tax management, even though these systems are not designed to handle these tasks. This is surprising given that the biggest challenge identified by the organisations surveyed is keeping up-to-date with highly dynamic legislative requirements from government (33%), followed closely by the challenge of combining tax information from disparate ERP or ecommerce systems (26%).

Identifying the best-performing businesses as ‘Leaders’, the research also points out that this group is 45% more likely than ‘Followers’ to have an excise tax engine. 28% of Leaders use dedicated software for their excise tax returns, compared to just 2% of Followers, while organisations with specific excise engines saw a 22% improvement in the time addressing tax errors over the past two years, helping reduce the work required, while helping avoid fines and maintaining profit margins.

The Avalara and Aberdeen Group report is based on an international survey of 82 organisations and examines why top performers use a dedicated engine to manage excise tax and the benefits that those organisations receive.