The pace and scale of disruption we’re seeing in the global tax environment is unprecedented – and it’s forcing tax functions to change the way they work.
Heads of Tax know they need to streamline their operations, while equipping their teams to generate more strategic value for the business.
Yet they typically lack the resources that major change programmes require. And making the business case for the necessary investment is critical, especially when it comes to influencing board-level decisions.
So how can you drive the changes that will make your tax function a genuine strategic partner to the organisation?
Cost pressures are driving corporations to globalise their operating models in search of greater efficiency. That means centralising functions such as tax, often by shifting them to shared-service delivery models.
At the same time, technology is enabling greater automation of tax processes – which is a compelling proposition given the cost pressures firms are under.
Technology is also allowing tax authorities to overhaul their approach to assessing tax liabilities. Instead of requiring companies to file their own returns at year-end, they’re requesting real-time financial data from them, and using it to calculate the tax owed.
This change of tack from tax authorities raises the bar when it comes to data quality and processing.
Tax teams must have the relevant information at the ready when tax authorities ask for it. And increasingly, authorities expect to be able to access and check businesses’ data ‘live’. Cleaning it up before submitting it is therefore increasingly not an option; companies must invest in the procedures, systems, controls and tools to ensure that it’s right first time.
But the implications of a changing tax landscape goes beyond data.
Transforming the tax function can’t be done in isolation. Whatever changes are made must support the company’s overall strategic objectives, and align with its wider operating model.
All of which is leading Heads of Tax to rethink the skillsets their teams need.
Technical tax skills are no longer enough. Digital capabilities are becoming essential, as technology underpins operational transformation. The same goes for ‘soft’ skills such as negotiation. With the change in approach from tax authorities, liaising with them will be an increasingly common task.
The power of three
In this challenging climate, tax functions must be fit for purpose now and in the future. You need to be compliant today, and ready for the digital world of tomorrow.
In my experience, that means reassessing three key aspects of your operations:
- Sourcing model. Evaluate which tasks your team should be handling inhouse, what can be outsourced and how internal structures (e.g. shared services) can be better leveraged. The optimal mix will vary from company to company. However, outsourcing compliance activities such as tax reporting and filing returns should free people up to focus on higher-value strategic work.
- Processes and technology. Look for opportunities to operationalise change, by improving processes using technology. Digital tools and solutions can be deployed to streamline your procedures, making them more efficient and your team more productive.
- Performance criteria. Put KPIs in place to assess the value your function contributes to the business. This may mean moving away from tactical measures such as timeliness of tax returns, in favour of areas such as cash tax management, improved tax audit management, increased focused on operational taxes and embedding tax requirements (e.g. operational transfer pricing) into the business.
It’s with these priorities in mind that KPMG developed Tax Reimagined: our unique, holistic approach to transforming tax functions.
Tax Reimagined combines the latest digital solutions with our deep expertise in tax, technology and transformation to reshape your tax operations. Our aim is to reduce costs, improve quality and unlock strategic value.