Accelerating tax innovation with Microsoft Dynamics 365

Accelerating tax innovation with Microsoft Dynamics 365

Avalara’s taxing solution integrates with the platform to provide automated and standardised tax calculations

Danny Fields |

Digital transformation has been an increasing priority for businesses for years and new technology solutions that embrace automation have become a key part of every company’s DNA. Even before the Covid-19 pandemic, enterprise leaders across the globe were readying their businesses to move quickly ahead with innovative digital transformation strategies.  

But the pandemic accelerated timelines, forcing businesses to shift their road maps to be fully up and running with digital platforms and channels. This change has affected the pace at which businesses have turned to technology to automate and streamline operations.  

As a result of pandemic-driven changes around commerce habits, consumers have become accustomed to the ease and convenience of shopping in an omnichannel world. To meet changing expectations, retailers have adjusted their strategies to include new channels, markets and products. Retailers of all sizes have also had to re-evaluate the technology powering their operations to continue reaching customers in the post-pandemic era of commerce.  

This expansion of digital channels has increased the burden on IT systems, but also on financial systems and operations. Increased burden and the need for added scalability have led to a boom in digital transformation efforts across finance at a critical juncture.  

This new wave of digital commerce and omnichannel selling has only increased the sales tax complexity burden for many businesses. The 2018 Wayfair decision to eliminate the requirement for a US-based business to have a physical presence before a state can collect sales tax on the goods and services it sells, means that there has been a rise in obligations to economic nexus laws. Many businesses quickly learned that managing transaction data for multiple online channels serving customers across the globe would require technology that could handle the entire compliance process from calculation to returns. Now that commerce is increasingly shifting online, businesses should leverage cloud-based tax automation solutions to effectively manage their growing tax obligations.  

There are several reasons why companies should embrace a cloud-first strategy, rather than settling for solely an on-premises approach. For example, cloud-first solutions support a subscription model, with pricing based on cost-per-transaction or cost-per-use fees. They are also faster to set up and deploy, with implementation taking 10 to 30 hours and companies going live in 30 to 60 days, compared to six to 12 months for an on-premises solution.  

Complying with tax regulations is a complicated yet important responsibility for any business. It is difficult for domestic companies as they have to navigate the complexity of the many different tax rules that are in force across a single country. However, for those operating internationally, this task becomes more daunting. Leveraging a cloud-first strategy supports cloud-based tax automation because the cloud connects into most enterprise resource planning, accounting, and ecommerce systems. It also supports US sales and use tax, as well as value-added tax (VAT), goods and services tax (GST), and other cross-border taxes.  

Recent changes to sales tax governance across the globe, particularly economic nexus and a move towards digital tax initiatives and e-invoicing rules, have accelerated the need for more real-time, reliable cloud-based compliance solutions for a growing number of businesses.  

Avalara is solving the growing tax compliance burden for large and small businesses. To do this efficiently we are constantly delivering innovative solutions designed to take the pain out of compliance and leveraging automation to make it easy for companies all over the world to streamline their tax compliance management. Leveraging the right technology tools and partners is a critical element of this strategy.  

One of these key elements includes our sales tax integration for Microsoft Dynamics, which helps with basic tax management with Dynamics 365. The Dynamics 365 framework supports many types of indirect taxes, such as sales tax, VAT, GST, unit-based fees and withholding tax. These taxes are calculated and documented during purchase and sales transactions, and must be reported and paid to the relevant authorities.  

Avalara’s integration with Microsoft Dynamics gives Dynamics 365 customers access to full tax compliance management. We’ve integrated a standalone microservice built on top of Microsoft Azure into our Tax Calculation Service, allowing us to enhance the tax determination and calculation capabilities of Dynamics 365 applications with a more flexible and fully configurable solution.

As a result, we’re able to give customers access to full tax compliance management, which automates and standardises tax calculations across countries and regions. This helps users to configure and execute complex tax determination rules and calculations using formulas and conditions, and helps to simplify compliance maintenance for local regulations.  

Danny Fields is executive vice president of engineering and chief technology officer at Avalara

This article was originally published in the Autumn 2022 issue of Technology Record. To get future issues delivered directly to your inbox, sign up for a free subscription.

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