Explanation of the Importance of Taxes and Digitalisation for Business Operations

We have invited Tobias, tax and digitalisation expert at Siemens, who explains the importance of taxes for a company like Siemens with a example.

Taxes are essential for funding public services and infrastructure, which supports economic stability and growth. They redistribute wealth, reducing income inequality and promoting social welfare. Tax policies influence consumption, saving, and investment behaviors, impacting overall economic demand. Governments use tax revenues to manage economic cycles, stimulating growth during recessions and cooling inflation during booms. Internationally, tax rates affect the competitive landscape, influencing business decisions on investment and location.

Taxes are also fundamental to the financial operations of any business. There are various forms such as income tax, corporate tax, sales tax, and property tax, each impacting a business's financial planning and decision-making. Taxes fund public goods and services like infrastructure, education, and healthcare, which businesses rely on directly and indirectly. Navigating tax regulations and leveraging available incentives can significantly impact a business's profitability and compliance. A comprehensive understanding of tax obligations and opportunities enables businesses to strategically plan, mitigate risks, and optimize their financial outcomes.

Ignoring taxes in business operations and project planning can indeed lead to significant cost increases and financial losses. This is particularly true for day-to-day expenses like non-cash benefits and income tax. Even small oversight or mismanagement in these areas can accumulate quickly, especially in larger companies, impacting their overall financial health and profitability. Staying on top of tax-related matters is crucial for effective cost management and sustained business success.

As you see taxes are not only important but can also get really complicated as there is a lot of data gathering required for tax analysis. This data can also differ depending on the countries in which the operation is taking place. Another problem affecting tax analysis is the loss of knowledge related to demografic change and the lack of interest in the topic. This means that the time tax experts have for the analysis is getting smaller and smaller. These are two important problems Siemens and other companies have to tackle. The most promising solution for this is increasing the efficiency in which tax experts can operate and limit the loss of expertise by fueling digitalisation.

We are developing numerous digital tools to enhance data collection and streamline in-house tax analysis. For instance, we introduced the "SATO" tool, which is utilized in Germany to gather data on non-cash benefits. Non-cash benefits are additional remunerations provided by employers in the form of services or tangible goods, excluding any cash payments. The tool monitors millions of euros in expenses that are crucial for tax returns in Germany, ultimately saving companies substantial amounts. This tool is built upon the CITAX platform provided by DCCS GmbH.