New research from Deloitte shows that tax leaders are under increasing pressure to create strategic value as companies accelerate the transformation of business models, from digital transformation to rethinking their supply chains to investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, “To create real value for the company, the tax department needs to rethink its resource model and transform its technology infrastructure to build capacity and control costs.”
And the good news, says Mills, is that tax and business leaders have more ways to do this.
Deloitte’s Tax Operations in Focus study reflects the insights of global tax and finance managers at global corporations, highlighting the six topics high on tax and finance leaders’ agendas.
Trend 1: Companies are looking for more strategic advice on tax law
Companies are being pushed to develop new digital products and sales channels and to accelerate a sustainable transformation, and are thus entering new tax territory. Tax officers say their teams need to have the resources and skills to provide broader advice on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means pushing the boundaries of what tax professionals focus on and accelerating the adoption of advanced technology and lower cost resource models to meet compliance requirements and save time.
Joanne Walker, Group Tax Director, BT Group PLC: “Today there is still a high compliance burden, but the vision for the future would be that a lot of this will be eliminated and tax experts become subject experts who help with the programming of the machine. Quality control ensure and focus your time on advisory activities. ”
Trend 2: Tipping point for resource models
The business partnership requirements in the tax department are increasing, however 93% of tax officials say their department’s budget remains unchanged or is decreasing. In order to ensure that the tax function can redefine itself as a strategic function at the required pace, executives are choosing to shift more and more compliance and reporting to a combination of shared service centers, finance departments and outsourcing providers who are best. have invested -Technology of the extra class.
Trend 3: Digital tax administration is moving faster than expected
In addition to the corporate tax department’s increasing focus on working with their business colleagues, transformative changes in the way companies share tax information with tax authorities require the need to modernize operations faster. Nine out of ten (92%) of respondents say the changing demands of tax authorities on digital tax administration will have moderate or strong effects on tax operations and resources over the next five years – and several tax executives said the trend is increasing developed faster than expected.
“It has really intensified in recent years,” says Anna Elphick, VP Tax at Unilever. “In addition to faster compliance, tax authorities want access to a company’s systems. It is not unreasonable to believe that compliance is about companies reviewing a tax return statement in much less time than expected. ” . “
Trend 4: Data simplification and more cost-effective use of resources are top priorities
Tax leaders said simplifying data management (53%) and moving to lower-cost resource models (51%) must be a priority if taxes are to become more proactive in providing strategic insights to the business. Many tax teams make sure they have a seat at the table when they overhaul ERP systems, which pays off: 56% of those who have implemented NextGen ERP systems now support the company very effectively with insights from scenario modeling. Only 35% of those with moderate to low usage of NextGen ERP systems said the same.
At Stryker, “We have automated the source P&L process for transfer pricing, which has taken the pressure off the divisions tremendously,” says David Furgason, Vice President Taxation. “Then we created a transfer pricing database to store and retrieve data so that we have limited influence over the divisions. We are moving to a single ERP platform that will help us take the next step with robotics. “
Trend 5: Skillsets are shifting
The embedding of a new data infrastructure and the redesign of processes are crucial for the future tax vision. Tax leaders are aligned – knowledge of data (45%) and experience in technology processes (43%) are a must in a future tax department, but more traditional tax expertise also remains crucial (40%). The trick to success will be for tax leaders to enable these professionals from their diverse backgrounds to work together collectively to unlock lasting value.
Take Infineon Technologies, who formed a VAT technology and governance group “that has the right knowledge of how to change the system to ensure the right reports are produced,” said Matthias Schubert, global head of Tax. “Getting involved at an early stage was crucial as we took a greenfield approach so we could think about what the optimal processes would be and how smarter systems could have an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerated shifts to remote work (48%) were cited as the greatest operational benefits from the COVID-19-related disruption. However, with 78% of executives now planning to embed either hybrid or fully remote models into the control function over the long term, 34% say maintaining productivity benefits is a primary concern. And when executives think about building their talent pipeline and strengthening consulting skills, 47% say they need to prioritize new approaches to talent identification and career development in the next two years, while 36% think new processes are needed to incorporate tax into business strategy decisions be established.