Reimagining the tax function
In our third edition of the annual survey, we compiled responses from 100+ companies on their tax transformation journey.
The report encompasses the fact that the tax and finance functions may need to seize the opportunities that emerge from the disruption and become future-ready. They might need to think out-of-the-box to future-proof themselves, as transforming today may go a long way in being ready to take on tomorrow.
Key findings are as below:
Navigating the impact of the pandemic
Traditionally, companies have been apprehensive toward effectiveness of a remote working tax function, which also set an opaque view toward the concept of outsourcing tax and finance functions. However, COVID-19 has proved to be a “star witness” on this front and has contributed to a huge change in this perception by forcing companies (without exception) to adapt to remote working methods. Now, an increasing number of companies are actively exploring new ways of working including outsourcing their tax activities and/or introducing tax process automation.
Digital tax administrations continue to impact tax functions
There is no doubt about the rapid pace at which legislative and regulatory changes are being brought about and it seems this pace is unlikely to slow down.
Basis the responses received, it also appears that tax function budgets have increased over the recent years to aid tax functions in dealing with digital tax reforms including initiatives of the government.
Changing role of the tax function
Our latest survey report concludes that most respondents think that adding value to business through tax insights is the biggest challenge at the strategic level of the tax function. In the current state, majority organizations think that tax function spends its time in routine compliance activities, however, in the future it may spend in higher value-added services. Hence, in the immediate future it is important for the tax functions to bring about a tax transformation from being a mere compliance center to becoming a strategic business partner.
The C-suite expects the tax function to become a strategic partner for business by providing valuable insights and facilitating decision making. To achieve this, companies are reimagining their existing tax functions and supplementing it with robust data management, automation and outsourcing where possible.
Talent demand and skills
Having resources that possesses tax technical skills is no longer enough. Tax functions need to have talent that can understand technology, identify and automate tax processes to bring in efficiency and leverage the ERP system for all tax data requirements. There is a strong need for digital tax transformation.
Data is a critical element of the tax function and it continues to be a challenge for more than 60% of the respondents. Given the legislative changes coupled with the government’s sharper focus on data collection and digital tax coming into picture, it has become imperative for companies to address data gaps, reduce people dependencies and take appropriate action on a proactive basis.
Optimal tax function
Clearly, ensuring a tax compliant organization is the top priority for most tax functions. Further, to be able to achieve this on a sustained basis, companies need to have the investment in the right kind of technology, skillset and a number of resources along with the right processes/ controls.
Being future ready
A majority of respondents feel that tax transformation is the need of the hour. It is important for the companies to assess and take necessary steps to meet their tax and finance function objectives.
Like what you’ve seen? Get in touch to learn more.