Opportunities for tax to create value beyond the return

By Shari Forman, Tax compliance & Private clients US and Alina Achy, Connected Tax Compliance Canada

A scalable data strategy and technology platform will be critical in managing these competing priorities. Connected tax compliance – an approach that coalesces technology, data, people and processes – lets tax executives free their people to focus on insights and analysis that can help guide where the business goes next.

This aligns with what we’ve heard tax executives are seeking. Respondents in the PwC Future of Tax Function Survey 2023 say they want the ability to derive greater insights while proactively managing risks and compliance. Whether it’s business planning, finance strategy, restructuring or business model optimisation, tax is a strategic player. Tax functions, however, often don’t have sufficient resources to achieve these goals. Only 26% of respondents say they foresee an increase in their headcount in the next three years. Another 11% expect their numbers to decrease.

Sixty-nine percent say they are making greater use of technology and 63% are upskilling and reskilling existing staff to meet the demand. Manual processes and challenges maintaining visibility across tax engagements take time away from innovation. Technology can be leveraged to integrate tax professionals into the business, and can support strategy decisions that may have tax implications that previously were unknown due to lack of information or capacity.

^{Q.: How are you planning to respond to these increased tax reporting and compliance responsibilities?
Source: PwC Future of Tax Function Survey, May 2023: base of 155}

Mining for insights

Every part of the business impacts the tax function, and tax executives from the largest organisations say they want tax to evolve beyond the return to provide value.

Connected compliance and tax-first holistic thinking can help. Technology systems can create intuitive data visualisations and powerful analytics that can surface and simplify deeper insights and business opportunities.

When tax insights are integrated into the broader business strategy, they can help better shape investment decisions, plan for future transactions and expansion into other territories. They can also offer a nuanced analysis of tax risk, and can play a key role in helping companies monetise opportunities found within regulatory updates and legislative changes.

Finding the right fit

We’ve seen a significant increase in the demand for new and different tax technologies, but it can be a struggle to identify a scalable technology ecosystem that would be the best fit for their growing needs. Thirty-seven percent say implementing new technology is the biggest challenge for their tax function.

The right technology investments can automate processes and can unlock data insights in real time. That data helps tax leaders think differently about what they are doing and what they could be doing to benefit their organisations more broadly.

Point solutions and tax modules within ERP are the main technologies tax functions use to support compliance and delivery. Tax executives, however, say they want better integrated tax technology suites, not multiple solutions with different implementation methods and interfaces. We’ve heard similar issues directly from clients, which prompted us to create Sightline, to unites multiple tax technologies and provide a clearer view of the tax ecosystem, deliverables, analytics and progress in one place.

Incorporating Generative AI into the tax technology strategy can help further automate and enhance manual and time-consuming tasks. Its ability to generate tax content, process documents and better understand tax domains can provide the visibility, insights and analytic capabilities for tax departments that want to free their teams for other activities that add value.  

Elevating tax

Regulatory and compliance burdens will likely continue to escalate over the coming years, and about 85% of respondents say they are very or moderately effective at meeting regulatory requirements. Today’s businesses need tax functions that go beyond compliance to provide greater value. That value may not immediately be tangible, because it’s not just about the return, it’s about surfacing and analysing insights, identifying optimisation opportunities and mitigating risks that could prove very significant in the future. In today’s complex tax environment, those intangible contributions are crucial.

Recognising the power of timely, quality tax data and investing in the right skills and technology needed to draw insight from that data is essential to elevating the role of the tax function. The result will be a tax function that provides recognised value right across the business.