By Vik Sachdev, Tax Transformation and Connected Tax Compliance Leader, Canada and Connected Tax Compliance and Alina Achy, Connected Tax Compliance, Canada
Technology is becoming the key differentiator in tax function success, as companies shift to digitised and automated solutions to meet the ever-increasing compliance burden. Yet even as this trend evolves and accelerates, the technology transformation is exposing gaps in corporate capabilities. But with the right ‘connected compliance’ approach, companies will be able to address these gaps rapidly.
A recent PwC global survey on the Future of the Tax Function showed just how fast corporations are already accelerating their move into technology-enabled tax reporting and compliance. Significantly, more than half of all companies in the survey said that over the next two to three years their response to tax complexity and the increasing compliance burden would be to use more technology and invest in the skills to match.
For the biggest companies, the technology skills need is urgent. For example, while 79% of large organisations surveyed said that they will increase their use of technology, 85% said they need people with more technology skills and 80% said they need to upskill their staff in new areas such as data analysis.
“Business as usual is really not an option anymore for the tax function. There's too much complexity and change going on in the global tax landscape. The workload of a tax function is quite possibly going to be doubled – and with the resource constraints and budget constraints affecting all organisations, companies are certainly not going to double the number of people in tax compliance. So they really need to turn to technology.”
Vik Sachdev, Tax Transformation and Connected Tax Compliance Leader, Canada
For many companies, the technology push will be a necessary transformation. Given the pace of change in the global tax landscape it is very unlikely that companies will be able to manage the workload of Pillar Two, local corporate income tax reforms, US tax reform, plus European sustainability reporting and country-by-country mandatory disclosures without equipping themselves with the technology to automate much more of the compliance process.
Technology transformation in tax has lagged in the past, not least because it has been difficult to demonstrate the return on investment for automation. But as regulatory expectations grow the question has changed: is it no longer a matter of what is the return on investment, but rather what is the cost of not investing.
There are some relatively low-cost technology implementations available to corporate tax functions, including off-the-shelf tools such as the data management software which can save countless hours of manual work in preparing data for tax calculations and filing. But despite the great improvement in tax tools available in the current generation of ERP offerings, there is still no plug-and-play solution that can solve all the complexities of corporate income tax or environmental taxes for a large cross-border business.
As a result, companies will need to partner with dedicated tax technology providers and look to greater outsourcing. Our recent survey confirms this: 41% of the largest organisations said they would turn to outsourcing to accelerate change. For many companies, gaining immediate access to technology and data specialists (as you can with an outsourced or managed services provider) will be the only way to improve real time reporting, and shift the tax function from a focus on historical reporting to forward-looking insights about regulatory change and how it shapes the business model.
“The word ‘transformation’ often seems scary, and people think it is a huge exercise and that it requires substantial financial and people resources. Yet sometimes speaking up front to outsourced providers about how the services they offer can be combined with in-house resources and skills will help organisations achieve the transformation needed far more quickly and efficiently.”
Alina Achy, Connected Tax Compliance, Canada
The PwC Connected Tax Compliance practice is built to meet this need for a collaborative solution to proliferating compliance demands. Companies recognise that the total investment in technology for compliance cannot and should not be the work of individual organisations – it needs to be done at scale by specialists working where software and tax skills meet. Collaboration for compliance makes business sense because it allows companies to focus on their core businesses.
This is why Connected Tax Compliance is designed to meet companies ‘where they are’. Whatever their skillsets and whatever their position on the tax technology implementation curve, we can accelerate and cut the cost of compliance transformation by bringing new technologies, implementation experience and a global knowledge network to a business as it exists right now.
Tax compliance is changing, and much faster than before. That means it’s the time to accelerate transformation.
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