By Bivek Sharma, Chief Technology Officer, Tax and Legal Services, PwC UK
The move from spreadsheets to systems-based solutions is gathering pace - as those responsible for tax know, they have much to gain from driving business insights through data and strengthening compliance processes and controls. The big question for many businesses is; how does tax add that value in the fastest and most effective way?
The challenge is heightened by the need to make the most of what may be limited funds. PwC's 26th Annual CEO Survey confirms tax is some way behind HR, legal, finance and risk in securing investment in technology. Meanwhile, in our Reframing tax study, some 60% of decision makers say a lack of funding is holding them back from embracing digital transformation further in tax (either in the function or organisation).
Many start with a long list of pain points and then seek to find solutions for them. The problem is these point solutions can fall down on a number of fronts.
First, they tend to focus on what’s going wrong now, rather than gearing up operational capabilities to deal with future business and tax authority demands. Moreover, these point solutions also tend to do little more than treat symptoms rather than causes, a shortcoming that can be compounded by a lack of coordination. The result is needless duplication of effort. And even then, the underlying issues remain unresolved.
A more effective approach would be to look at the big picture – what your business expects from the tax operations and where it needs to be as you look to future-proof your operations. You can then identify the right balance of human-led, tech-powered capabilities you need to realise your objectives.
The biggest of investing in tax technology and systems, accorsing to the businesses who've invested in the last two years
The other main misconception is believing self-built solutions are the only viable option when far easier and cheaper alternatives are available. In part, this often stems from the assumption that the business’ tax affairs are so complex only a bespoke solution will do. Limited knowledge of the tech and vendor landscape also means tax leaders may not know what other options are available.
In reality, you rarely have to incur the effort and expense of self-built solutions. In my experience, many manual tax processes can be streamlined in a matter of weeks with the use of simple and readily available automation tools, and existing platforms.
ERP systems have been advancing rapidly in recent years. This includes the introduction of a new, improved and increasingly versatile range of dedicated tax tools – Oracle EPM Tax Reporting or SAP Tax Compliance, for example. In turn, business systems can easily be adapted and configured for tax. For example, our Indirect Tax Edge solution automatically extracts, collates and configures data from group-wide sales and finance systems and then prepares local country filings and payments.
You’re also potentially sitting on a range of hyper-automation tools included within existing enterprise licences that are not being fully utilised - such as the Microsoft Power Query, Power BI, Power Platform, Alteryx, RPA platforms. There are minimal incremental licensing costs and Internal approval is already in place, making the process fast and inexpensive.
In terms of third party solutions, the advantages of off-the-shelf platforms don’t just include speed of configuration and implementation, but also regular updates. If there are changes in VAT or corporate tax, the third party supplier will modify the software so you don’t have to.
Another attractive alternative is tax managed services, which provide you with both qualified people and new systems to help you manage your tax requirements during transformation, when staff are otherwise committed. Tax managed services can also provide an agile and scalable longer term solution to operational demands, taking care of core demands such as computation and filings and keeping you up to date with regulatory changes, while ensuring that the supporting systems are best in class.
You might ask if there is still a place for enterprise self-built applications. The answer is yes; but given the inevitable time and expense involved they should be the last resort. Typically we find that only a small percentage need us to build in-house custom Enterprise applications.
How can you move from needless over-elaboration to pragmatic planning and execution? With your overall vision for the future in place, two further priorities stand out:
The starting point is for those responsible for tax to work with advisors and IT teams to get up to speed on existing third party off the shelf solutions, platforms/tools which are included within your current licence stack and the tax managed service options that can help support and augment your capabilities. IT functions are likely to be receptive to existing agreements and credible vendors and this is one of the first steps we recommend.
This article is one of a series designed to help those responsible for tax navigate their transformation journey. If you have any questions or would like to know more about redefining the role of tax in your business, please get in touch.
Understanding your starting point is critical to finding the right way forward. Use our interactive tool to assess where you are on your journey to being human-led, tech-powered and access further content to help deliver greater business benefits.
Tax: we all know it can be complex. But what’s the best way to deal with that complexity? At PwC, we’ll ask you about your organisation’s aims so we can help you achieve them. We’ll listen to your tax issues and find the best ways to resolve them. Whatever the size of your business, we’ll work together with you to help you manage your tax affairs.
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