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The changing shape of the tax and finance function

The changing shape of the tax and finance function

Find out how automation is changing the tax reality

Chris Downing

Partner, Tax

KPMG in the UK


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changing shape of tax

The services model for multinationals keeps evolving. Since the advent of the shared service centres of the early 1990s, to taking processes offshore later that decade and the rise of external service providers in the following years, most international groups have now moved on to use global business service centres, often offshore or outsourced or both, to run integrated service delivery models within one organisation.

Automation marks the next stage of this evolution. This will not just bring added efficiency to the business services model – it will fundamentally change the nature of the finance and tax functions.

Consider tax compliance services. Previously these were beyond the scope of most business process outsourcing firms, which mainly dealt with transactions such as invoice payment processing and indirect taxes and duties. Now automation is enabling organisational business tax services to be delivered through a global business services model. For example, KPMG is engaged in deals with two of the world’s largest multinationals in the complex oil and pharmaceuticals businesses to deal with their tax compliance on a global basis. 

Automation will make a massive difference to compliance service delivery. Clients chose to outsource because they want a better outcome: typically higher quality at a lower price. Applying technology will enable us to deliver those services that we would previously have delivered in person through new means, using automation and robotics, to improve speed and accuracy at a lower eventual cost.

That’s not to say the bots will do everything. The client service will probably be a combination of human intervention, some provided through offshore centres, supported by bots that carry out specific steps in the process. But expect the bots to deliver an increasing number of steps in the process.    

No question that this will cause upheaval in finance functions. Centralising functions and eliminating services by handing them over to specialised outsourced service providers will shrink departments and eliminate jobs.

This may seem frightening at first. But finance and tax functions have much to gain from this kind of re-organisation. It will allow them to concentrate on higher value add activities. Instead of employing large numbers of clerical staff to churn through transactions, the finance function will be able to concentrate on interpretation and analysis of transactions and the organisation’s position, giving a clearer picture to help with decision-making processes and strategy. 

Our view is simple: let the bots do what they are good at. Then the professional who sits within the organisation, who understands its dynamics and aims and strategy, can use the information and the outcomes to help the CFO and tax director make the right decisions.  

Cost will continue to be the single biggest driver for change. The back office has always been challenged to do more with less: this has been the case for the past 30 years and won’t change over the next 30. Automation will enable the tax function to be cheaper. That’s in addition to the higher level of quality, producing data faster and with a greater level of insight. 

Currently, there are quite straightforward bots which can simply churn through a lot more data much faster than a human can. But the greater the levels of sophistication, the greater the opportunity. For example, true AI/ cognitive technology could in time produce insights from a tax situation in China for someone in Europe without necessarily involving someone who understands the Chinese tax system. 

The investment case for automation is easy: to access better quality information and insight, at lower eventual cost. The world’s largest corporations operate in many jurisdictions and have highly complex structures. Being able to design the optimal tax structure requires a tremendous amount of information and insight. Automation is the only way to achieve that.

The robots are coming. There is no point in putting our heads in the sand and hoping that they do not. But don’t fear this. As finance professionals, we should embrace the change and design it, making it work to our advantage. Over the next couple of decades, the market will move towards greater levels of increasingly sophisticated automation. The question for finance and tax professionals is how best to shape this new world in a way that works for the companies we serve. 

If you have any questions or would like to discuss the topic further, please contact:

Claudio Altini

© 2020 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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