Bring tax advisers to the board room to navigate volatility

Tax can help strategic business planning, but leaders must have direct, regular communication with advisers.

In brief

• How can integrating tax considerations into business decisions help in managing risks effectively?
• What are the potential tax implications of changes in trade policy and how can companies prepare for them?
• What steps should companies take effectively integrate tax into their planning and decision-making processes?

This article was originally published by Bloomberg INDG in Bloomberg Law News, issue 2025-01-02, © 2025.

Tax considerations often can take a back seat in strategic business discussions, especially during times of volatility and uncertainty. Integrating tax into business decisions, however, is a critical step in capturing value and developing a robust risk management approach.

Companies increasingly are looking for ways to work with their tax advisers—whether in-house or external—to stay on top of tax changes that may affect the company’s operations and plans, and how they can fold that knowledge into the decision-making process.

Tax issues are complex and can touch on a wide range of topics, from trade to immigration or nearly any business issue in-between. An action in one area can trigger tax consequences in a seemingly unrelated area, which can be difficult to unwind.

Available tax credits and incentives that can help offset the cost of planned investments may be missed if tax isn’t integrated into strategic planning discussions.

Concerns over the US deficit and debt levels may produce broader changes to the tax code to offset the cost of extending the TCJA provisions—and these changes could affect businesses. Trade policy is another area where changes could happen quickly, triggering potential tax implications for organizations.

New and enhanced tariffs could affect companies’ existing structures and supply chains, promoting them to consider restructuring to better align their overall business models with revised trade policies. This could include re-evaluating distribution channels and sourcing locations, as well as using certain customs valuation techniques.

Some of this activity is already taking place—79% of respondents to the 2023 EY survey already made moderate or significant changes by moving to other locations to reduce supply chain risks, and 88% anticipated making additional moderate to significant changes to their supply chains by 2025.

Consulting early and often as these plans take shape can help companies better prepare for and address their potential tax consequences.

Executives who aren’t actively incorporating tax into business decisions may miss opportunities to integrate tax savings into their larger business approach. They also may leave the company open to increased tax liabilities and controversy risk. Those looking to better integrate tax into business decisions should consider the following steps.

Evaluate

Analyze how and when decision-makers in the organization and their tax advisers interact. Are there regular status meetings? If not, what is the right cadence for ensuring upper management stays informed of new tax developments? When are the effects of tax proposals modeled out, and how are those results shared? Is there a documented process to consult on tax issues as part of strategic planning? If so, is that process sufficient or do tax advisers need to be consulted earlier?

Implement

Once the gaps are identified, it’s time to create regular, direct channels of communication. Leaders should identify the appropriate points at which to consult their tax advisers on strategic business decisions, establish a schedule for check-in communications, and get it on the calendar.

Revisit

Keeping connected isn’t a one-and-done exercise. Existing processes should be re-evaluated as an organization grows and as roles shift. Determine whether the right resources are still in place to handle the volume of tax, regulatory, and legislative changes the organization faces, or whether to consider adding more resources or co-sourcing some of the work.

Having the tax function at the table for strategic decision-making is a must for forward-looking companies, offering benefits that extend beyond today’s planning cycle. Companies will want to review how tax is integrated into business decisions, identify any shortcomings, and work to close those gaps as tax policies begin to take shape under the new administration and Congress. This way, they will be better able to manage the effect of potential tax changes on business operations.