3. Pace of regulatory and technology change
In addition to the talent and scalability challenges discussed above, every industry faces two massive, fast-moving waves of change to manage around tax and finance functions: the regulatory landscape and technological advances. Oil and gas is no exception.
Legislative and regulatory change continues to alter the tax and finance landscape year after year. Especially during this economic environment, both global and US policies have the potential to significantly impact oil and gas companies’ tax and financial reporting obligations.
Another example, the Organisation for Economic Co-operation and Development’s base erosion and profit shifting program, by itself, is the largest set of changes to the global tax system in a century. Issues around digital taxation and the increasing global interconnectedness of business are also at play. Like never before, compliance and reporting is a moving target.
In this environment, knowledge and competency gaps are rife, even as the demands on tax and finance are increasing. Today, many companies struggle to keep up in the midst of all this change.
And the risks of noncompliance are increasing, as tax administrators step up enforcement. Direct financial damage (fines, penalties) can be severe, but reputational consequences can be particularly damaging.