In the face of a relentless rise in regulatory demands, today’s tax leaders need a more connected, data-driven approach to compliance and reporting.
Probably one of the most overused phrases in the finance and tax world is that the compliance and regulatory burden is increasing. This can be a worry for many organisations, but arguably it’s an even greater problem when 50% of tax leaders surveyed state that in-house tax headcount will stay the same and 59% state that they will have the same budget or less budget to deal with an increasing workload.
With some tax departments being responsible for 8 or more different taxes/compliance processes in many territories, this is a lot to manage.
Adopting innovative approaches to compliance, collaborating and co-sourcing skills and technology will help accelerate your ability to respond to these challenges.
Rethinking how you ‘Connect’ data, teams, processes and insights across all elements of compliance and reporting to reduce the reporting burden.
Tax has an opportunity to create lasting, organisation-wide benefits. Organisations want visibility, transparency, data analysis, and insights that go beyond tax. It is no longer just about the completion of ‘historic’ tax returns, but leveraging tax data to look forward.
When we asked organisations what they see as the biggest opportunities for them/their tax functions to add value to their wider organisation, they answered as follows:
It’s time to reframe the conversation and bring tax to the forefront of every business and strategic conversation.
Technology point solutions and tax modules within ERP are the top two technologies used to support tax compliance delivery - however they are only used by approximately half of companies surveyed.
With only 27% of respondents using smart automation and 24% using automated controls to manage the execution of tax processes to a great extent, there is still a way to go in terms of organisations fully embracing the value of technology in compliance.
When it comes to investing in technology solutions, we recommend the following steps:
With the rise of real time reporting, having good quality data at your fingertips is going to become increasingly critical.
However, the reality that lots of organisations face is that with disjointed finance and tax technology systems and a lack of in-house technologies that can provide a digital audit trail, this is difficult. Tax data is housed in multiple locations and often isn’t available in a tax-ready format. In many cases, the information is in less useful forms with an inadequate level of detail, and gathering it can be difficult because it can span multiple geographies and business units.
Our survey highlights that only 29% of organisations surveyed said that ‘all data I need for tax compliance is stored in a central repository’ and only 26% had a full digital audit trail.
Plus with 31% of respondents saying the quality of data to be used in tax processes was less than good and 44% not being able to access high quality historical data quickly. It is not just about having data in one place and connected digitally, they also need better quality data.
We believe that having a clearly defined data strategy should cover 4 key areas:
For 87% of those surveyed, Pillar Two was going to be applicable to their organisation, creating a much increased compliance burden that they need to be prepared for, particularly as these rules require an entirely new data set to be gathered and analysed.
However, organisations are at very different stages in terms of how well prepared they feel for Pillar Two:
Having a centralised, connected and controlled process is essential to help speed up preparations for Pillar Two, as organisations need to:
Thinking beyond just the initial Pillar Two calculations, to how these fit with your wider compliance processes, is key. You will need to use data smarter and create efficiencies in the process to be able to comply. With time running out the pressure is on to make sure you are ready.
Our Future of Tax Function survey, fielded 9 March to 16 May, surveyed 273 managers, directors and vice presidents of tax / finance about how they ran their current tax functions/delivered their tax processes and how they expect this to change in the future.
The Tax function is inevitably headed for a technology and data-driven future, requiring a different skillset and a lot more automation. The change is an opportunity for Tax to create value beyond the return.
Every now and then, in sport, in industry, in life there is an event that causes a step change in the current way of doing things or thinking.
In our last article on the future of the tax function, Alina Achy and Vik Sachdev elaborated on technology being the key element in tax transformation. With many organisations looking at how they can get better value from the technology they already have, or plan to implement technology for compliance in the near future.
What does the MRDP regime involve, what are the potential pitfalls and how can you make sure you are on track?
Factoring tax insights into any business transformation can lower costs and overall risk to your organization. Getting there starts with a good data strategy.
