Digital construction of business, finance and tax compliance
In April 2022, the 25th meeting of the Central Committee for Deepening Comprehensive Reform reviewed and adopted the Guidance on Strengthening the Construction of Digital Government, requiring full implementation of the national cyber development strategy, a wide application of digital technologies in government administration and services, and active promotion of the digital and smart functioning of government.
He called for taking full advantage of the important supporting role of digitalization in the exercise of state functions in economic regulation, market regulation and social governance, and building a capacity system of collaborative and effective digital performance within the State.
By using digital regulation of a digital government, regulatory departments can accurately and comprehensively obtain and process companies’ real-time financial and tax data, and closely supervise, investigate, and take action against those with operations. abnormal. However, companies generally suffer from weak infrastructure, low awareness and a lack of qualified personnel in the areas of business, finance and tax compliance and, more importantly, a lack of digital building.
To keep up with direct regulation by digital government, companies need to strengthen the digital construction of trade, financial and tax compliance, build clear and comprehensive digital portraits of their business terms and establish early warning and elimination systems in real time. Companies are advised to advance the digital construction of business, finance and tax compliance in the following aspects.
DIGITIZATION OF CORPORATE COMPLIANCE
Business operations of a company involve market access, market functioning and many other aspects. Corporate compliance involves the prevention and control of risks such as false advertising, commercial corruption, confusion, premium sales, violation of trade secrets, exclusive and restrictive competition, damage to reputation, quality substandard products, substitution with substandard products, use of standard terms to exclude consumer rights, disclaimer, contract fraud, false advertising and consumer deception.
In the age of the Internet, business data of enterprises, external advertising, business contacts and consumer services, among others, have already been included in the scope of regulation. Digital regulation can usually automatically filter out abnormal data indicators in business operations. Due to the wide range of requirements and extensive systems for corporate compliance, there is a need to leverage the power of digitalization to achieve effective risk prevention and control while improving efficiency through digital compliance management of the entire business operations process.
DIGITIZATION OF TAX COMPLIANCE
Good internal flow in companies can be achieved by eliminating the natural barriers between sales, finance, legal and management. Invoices used throughout the cycle of business operations are essential elements in strengthening day-to-day management and are an integral part of internal control.
Invoices are the most important vectors of the evolution from tax management by invoices to tax management by digital tools. Only by establishing a digital invoice management and compliance system and achieving a minimum unit of control through the digital management of massive, frequent and complex invoices can the divide between business, finance and tax can be effectively filled.
Jinxin Yipiaotong, a big data tax and tax tool providing tax compliance and cost control services to businesses through invoices, is an admirable endeavor that has racked up some successes. It provides timely early warnings for frequent violations, such as fake invoices, and performs three-dimensional analysis of all invoices through a rules engine. With such data capacity, companies can analyze and assess risks and develop compliance programs.
DIGITIZATION OF FINANCIAL COMPLIANCE
In March 2020, the Ministry of Finance and the National Archives Administration jointly formulated and published an opinion on the standardization of reimbursement, accounting and archiving of electronic accounting documents, which requires that companies’ accounting systems can receive and read electronic accounting documents and their metadata accurately, completely and efficiently, carry out accounting activity in accordance with the unified national accounting system, export electronic accounting documents and their metadata in the format prescribed by the service of the administration of the national archives, and have procedures for processing, review and approval.
Through their internal financial information management systems, companies can timely retain electronic evidence in the automated electronic process and store it on a unified digital platform. While performing real-time monitoring and post-event analysis, companies can monitor compliance risks in real time to reduce costs and increase benefits.
SYSTEM COMPLIANCE DIGITIZATION
Running and managing a business can be complex and complex. To ensure system-wide legal compliance, companies should designate personnel to quickly triage, track, and report industry-specific policies, updates to laws and regulations, industry trends, and information. evolution of sanctions cases.
For the digitization of system and policy update, it is necessary to use all kinds of digital information platforms collecting legal data to timely update policy options in the form of push messages, customization of content and special research to achieve an accurate, timely and effective presentation. information such as laws, regulations, policies, regulatory guidance and hotspots, and typical cases.
Digital government requires companies to build compliance management systems for internal control processes. Companies are advised to explore digital models of self-inspection and self-monitoring at lower cost and use high-efficiency tools, formulate programs based on risk assessment and carry out monitoring of compliance in order to establish simplified and efficient procedures to meet the challenges of the new economic environment. and maintaining the bottom line in business, finance and tax compliance.
Quan Kaiming is a partner and Yuan Wei is a partner at AllBright Law Offices. Xie Meishan, a partner at the firm, also contributed to the article.
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