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Building trust through tax technology

Building trust through tax technology

With tax part of a general decline in public trust in institutions, new technology has a role to play in recovering it, with its ability to help with processes, insights, and decisive leadership key.

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The subject of tax has been prominent in the rapid decline of public trust in Australian organisations over the past 5 years. Base erosion and profit-shifting, debate over the corporate tax rate, findings in the Financial Services Royal Commission, and high profile disputes over claims have all contributed to positioning tax at the heart of public discourse on trust in business.

The Edelman Annual Trust Barometer highlights that trust in business globally has declined for the past 5 years, with trust in Australian business declining below the 2017 mark to 48 percent, sitting well below the global average of 52 percent1.

Meanwhile, regulator calls for tax transparency have shone a light on corporate taxpayer behaviour with respect to governance and performance. A 2018 Corporate Tax Transparency Report by the Australian Taxation Office (ATO) has revealed that ‘one in four of Australia’s largest companies paid no tax last year2’. In addition, political campaigns for corporate tax cuts and high profile tax disputes have elevated the debate on tax justice, and raised questions on both the legal and ethical dimensions of tax.

Amid these complexities, tax leaders are increasingly expected to inform and advise on business strategy and commercial decisions, which requires an open dialogue with a range of business units. Tax leaders need to focus on building trust with both internal and external stakeholders to deliver on the rapidly evolving regulator, public and business expectations of the function.

Like every business unit, tax needs to have a sense of purpose that extends beyond compliance and cost saving. To build trust, this purpose needs to reflect stakeholder interests both in terms of business strategy and social license to operate. Tax leaders need to be able to communicate this through stronger narratives that help stakeholders make sense of tax decisions. This requires specialist capabilities and meaningful exposure to the business to best advocate the benefits of the tax strategy.
 

Tax technology is a key way for tax teams to overcome both the public decline in trust, and to gain the right insights to serve as a trusted partner in the business.

Four key ways to build trust through tax technology

While tax technology is nothing new as a means to streamline processes and analyse data, today’s tools are much more powerful than the software and systems of even the recent past. The tools have the potential to help tax leaders build public trust and earn a seat at the leadership table. After all, tax has a pulse on information and indicators that can help to model future outcomes, minimise risk and inform business strategy.

In fact, technology is now critical for tax leaders to navigate the interconnected trends transforming tax today – not just the digitisation of tax, but also geopolitical currents, evolving business models and reimagined tax functions. As a result, tax leaders will need to leverage technological advances to rethink the role of tax in the broader context of developing organisational trust.

There are four ways that tax technology can play a key role:

  1. Technology for trust.
  2. Building processes, data and insights.
  3. Technology for effective leadership.
  4. Digitisation, automation, AI and blockchain.

Read more in our report.

Footnotes

  1. 2019 Eldelman Trust Barometer, Global Report, 2019.
  2. Corporate Tax Transparency Report, Australian Taxation Office, 14 December 2018.

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