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Five strategies to help modernize your tax and finance functions

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Data from 100 US-based multinational companies – part of a recent global tax and finance survey – offers a guide to better transformation.

Three questions to ask

  • How can companies better prepare for US CAMT and BEPS 2.0 reporting requirements?
  • What should tax and finance leaders do to face skill shortages, shrinking budgets and technological change?
  • How can co-sourcing of tax and finance operations help mitigate certain risks and deliver cost efficiencies ahead of future demands?

Many tax and finance operations are struggling to meet demands. A workforce that isn’t sufficiently tech-savvy is aging out and finding employees trained in new digital platforms remains a challenge. Meanwhile, these technology and data challenges are bumping up against mounting regulatory and reporting requirements.

New and emerging regulatory changes such as the U.S. Corporate Alternative Minimum Tax (CAMT) and BEPS 2.0 rules are exposing these converging challenges — both poised to transform the domestic and international tax landscape respectively, with reporting and compliance consequences for every industry.

The US multinational respondents to the 2023 EY Tax and Finance Operations Survey underscored the urgency: 97% of respondents ranked tax and finance model modernization a top priority – a 5% jump from the same study conducted in 2018. In fact, the survey revealed that most organizations haven’t completed a BEPS 2.0 impact assessment and thus have yet to grasp the full dimensions of the regulatory change.

With shrinking budgets and the aforementioned skill shortages, meeting emerging regulations while running the organization can be a heavy lift. To help tax and finance leaders pave the way forward, here are five strategies for modernization success.


1. Get ahead of reporting requirements with an objective assessment


BEPS 2.0, CAMT and other emerging changes are driving the need for real-time reporting – and for certain reporting requirements, the clock is ticking. Companies must identify, evaluate and implement transparency initiatives before new rules take effect. It starts with an objective assessment of existing tax and finance functions. The resulting insights can help an organization create a transformation roadmap and guide specific modernization programs. This roadmap would help determine the operating model, which could range across a continuum that spans outsourcing, co-sourcing or in-house tax function redesign. This vast cross-functional effort involving tax, accounting, legal, IT and other critical operations, typically offers leaders the best chance of designing a successful tax and finance function. Working with an outside provider, co-sourcing partner or an outside consultant also gives companies access to a much larger knowledge base to create a roadmap for closing talent gaps, keeping an eye on compliance costs and staying ahead of new reporting requirements.


2. Adopt a strategic view of talent


More than half of survey responders said they struggled with motivating talent and avoiding burnout, while 63% thought that their employees needed to increase their data skills within three years. This may explain why 61% saw co-sourcing as a pathway to develop their teams for more strategic projects and opportunities. The world of CAMT in the US and BEPS 2.0 globally is becoming increasingly digital: many tax professionals will have to become tax technologists and finding the right resources may take more than assessing experience and education. From knowledge professionals and management all the way up to the C-suite, finance teams must collaborate across all functions and share core competencies to meet the growing complexity of new compliance regimes.


3. Leverage the latest technologies


In 2020, survey respondents were split on the use of generative AI and automation tools. In the three years that followed, with large language models like ChatGPT becoming widely available, perceptions of AI are changing. Today, many legacy systems can no longer keep up with the increased sources of financial data and the processing demands of Pillar Two. Bottom line: The overwhelming majority of respondents said they lacked the necessary systems and requisite technical skills to gather the data and deliver on reporting requirements. Companies have to rethink how they use their existing digital infrastructure to support remote work, high-frequency online transactions, and regulatory changes in reporting and compliance standards. Co-sourcing this transition can help to redistribute the workload, focus technology investment and lower certain risks associated with switching to more powerful digital tools.


4. Double down on data analytics 


The more financial data end points there are — and the more differentiated they are within an enterprise — the greater the complexity. So, when 72% of survey respondents admitted to gaps between their enterprise reporting planning (ERP) systems and the platforms set to capture relevant tax information, it became clear that digital tax functions were advancing ahead of their data processing capabilities. In a global digital economy, with frequent changes to tax data flows and disclosure standards, strong data analytics capabilities are a strategic imperative. Finding the right operating model for your enterprise’s tax and finance function is important to organizing data and standardizing reporting models to help drive value, insights and timely compliance.


5. Make co-sourcing a key driver of tax and finance operations


Already, 98% of respondents say they are more likely than not to co-source over the next 24 months, up from 76% in 2020. Co-sourcing tax and finance operations can reduce time spent on tax compliance tasks, keep IT expenses under control, boost security and transparency, and send more internal resources to core business needs. As organizations feel the pressure of impending regulations and shifting workforce dynamics, co-sourcing is becoming more mainstream. Identifying high-value activities for internal teams to thrive while outsourcing other tasks can provide the flexibility and scalability needed to address present and future demands. To meet emerging regulatory requirements, organizations will have to future-proof their tax and finance operations. Co-sourcing can offer the right know-how, tools and insights for tax and finance functions. Above all, it can help mitigate certain risks and deliver cost efficiencies while empowering teams to move from a support function to a source of agility, strategic insights and innovation across the business.

Is your organization ready for change? EY Tax can help you shape a tax and finance transformation strategy to address your operational needs, ease strain from your compliance requirements, and modernize your tax and finance function. To learn more, visit our US TFO website.


Amid pervasive skill shortages, digital change, shrinking budgets and emerging regulatory requirements, the pressure on finance and tax operations has never been greater. Finance leaders should adopt a strategic view of talent, data and latest tech. Co-sourcing can help businesses overcome significant challenges facing their tax and finance functions.

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