How This Company Is Helping Businesses To Get The Tax Compliance Right Using AI and ML
The Government of India has continued its work on a unified approach to the digitisation of the tax function in the country with the introduction of GST, e-way bills, and the new and upcoming GST returns and e-invoicing, which were put on hold due to the COVID-19 pandemic. Digitisation of tax not only helps governments in curbing tax evasion but also helps businesses improve operational efficiency, reduce compliance risk, and ensure better cash flow. By announcing the Rs 20 lakh crore special economic package, which is equivalent to about 10% of India’s GDP, Prime Minister Modi wants to make the country self-reliant and revive the stalled economy. One of the five pillars of his economic plan, dubbed the Atmanirbhar Bharat Abhiyaan, has a technology-driven component. E-invoicing is the future of electronic billing, and many governments are adopting e-invoicing internationally. Digitisation of tax will become an even more critical priority as businesses must expedite their tax automation plans to operate efficiently in the post-coronavirus world. Avalara is one such company that is enabling businesses of all sizes to get tax compliance right. Analytics India Magazine got in touch with Sanjay Parthasarathy, Chief Product Officer of Avalara to understand its technology stack and how it utilises AI and machine learning deliver compliance solutions for various transaction taxes. Riding On To The Tech Game More than 16 years old, Avalara worked in a radically different way than how it works and operated today. When Avalara entered the market, the terms broadband, software-as-a-service, and cloud services were in their very early stages. As Sanjay shares, the company has evolved alongside the changes in technology and consumer preferences to provide best-in-class solutions for businesses to manage their expanding tax compliance obligations. Since then it has developed advanced technology to drive innovation in compliance, helping businesses to solve tax compliance. “From being among the first in the cloud to our current approach to developing and refining the application of emerging technologies like AI, ML, and NLP, we are committed to leveraging the best technology available to serve our customers,” says Sanjay. In 2019 alone, their product AvaTax processed 46.8 billion invoice line items, with customers making 17.6 billion API calls. Tech Stack At Avalara With a vision to provide compliance ‘suite’ built on a unified platform it does tax calculations, tax returns, tax compliance documents, verifications, financial & risk management, among others. “As a tax technology company, our technology stack is a reflection of our partners’ and customers’ environments. That said, we specialise in specific platforms and tools such as Microsoft Server Platform and Amazon Web Services cloud platforms,” shares Sanjay. He also added that the tax content research experts keep tax content updated using artificial intelligence and Machine Learning. Other than that there are several areas where AI and ML is applied to improve the customer experience and increase compliance. Sanjay shares that roughly 39 hours per month are spent on tax compliance-related issues which undeniably suggests that tax compliance is a complex and time-consuming process. AI and ML capabilities therefore help in minimising the manual tasks as well. A team of 600+ full-time members in the core engineering team globally, apart from 170+ members in other development-related teams such as IT services and product management leads the tech stack at Avalara. AI & ML Use Cases From tax calculations to product classification to returns, there are multiple touchpoints throughout the tax compliance journey that can benefit from AI and ML. Product classification: Due to the highly subjective nature of tax classification, it makes it difficult for businesses to know what products are subject to tax and which are not. For example, the state of New York varies widely on similar products. Shower caps are taxable in the state, but swimming caps are not. Slight nuances in product classification can spell significant compliance risks for businesses. AI helps in product classification which is the most critical step in the tax compliance process. Automatic rate and rule sourcing: One universal truth about tax compliance is that nothing is uniform – rules and rates change not only over time, but also between state, city, county, and local jurisdictions. Most often, these rules and rates are published on the individual jurisdiction websites a few weeks or days before they are effective. These rate and rule changes are either available in tables or in plain text. Avalara team gathers these sources through multiple means, parses them using NLP techniques, and publishes them to the content repository so that these can then be used by tax engines. Data Science Hiring At Avalara “Hiring at Avalara is not just about filling an open requisition,” says Sanjay. The company invests in building stronger teams. When it comes to data science, Avalara looks for candidates with backgrounds beyond just analysis. “Since our positions are not solely focused on creating dashboards, we look for people that have a background in market research, modelling, business intelligence, and strong engineering skills,” says Sanjay. While strong analytics and engineering capabilities are at the core of a solid data scientist and engineering, they also seek candidates who understand how to program and understand security, data quality, DevOps, and data operations. As Sanjay shares, each of these capabilities is needed across their data analytics, data engineering, and data science teams. AI Makes Them Stand Better Than Competitors “Avalara is uniquely positioned with our ever-expanding partner ecosystem and AI-powered content database. Our strong partner ecosystem has more than 700 cloud integrations with various partner systems, where other companies out there have fewer than 100,” shares Sanjay. Avalara can handle tax compliance across virtually any software that generates an invoice. This means that if a retailer has an ERP, point of sale and CRM system, Avalara can integrate data across all of these and ensure automated tax compliance. In an omnichannel world, Avalara aims at making data integration simple for customers. With the acquisition of Indix, they have a unique advantage of using artificial intelligence to help ingest, integrate, manage and communicate tax data faster. With today’s rapidly changing rules and regulations, this enables them to provide speed and reliability for our customers. “Our world is becoming more digital every day, so we know that it is just a matter of time before all companies will automate transaction tax compliance. Avalara’s cloud-based solutions are prepared to keep pace with any change that comes along with digital transformation on a global scale,” said Sanjay. Future Roadmap Like most businesses, Avalara is looking to slightly adjust their outlook due to the COVID-19 pandemic. The pandemic has forced many businesses to pivot to remote workforces and has allowed them to see the advantage of moving to the cloud first-hand, and Avalara sees this as an opportunity to grow its business. “While the current pandemic has significantly impacted cross-border e-commerce sales, we are confident that consumer trends will resume, and more digital shoppers will return to purchasing from foreign sites. We are constantly evaluating the needs of our customers to make updates to our existing product set and create new solutions to solve market needs as they emerge,” he said while signing off.
The Government of India has continued its work on a unified approach to the digitisation of the tax function in the country with the introduction of GST, e-way bills, and the new and upcoming GST returns and e-invoicing, which were put on hold due to the COVID-19 pandemic. Digitisation of tax not only helps governments […]
Digitisation of tax will become an even more critical priority as businesses must expedite their tax automation plans to operate efficiently in the post-coronavirus world.
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["data science", "cloud business intelligence solutions", "artificial intelligence", "business intelligence use cases", "machine learning", "AI", "R", "ML", "RAG", "NLP", "Aim", "analytics", "devop"]
["AI", "artificial intelligence", "machine learning", "ML", "NLP", "data science", "analytics", "Aim", "RAG", "R"]
Srishti currently works as Associate Editor at Analytics India Magazine. When not covering the analytics news, editing and writing articles, she could be found reading or capturing thoughts into pictures.