5 steps your business can take to future-proof its tax function
31 July 2019 | Web Article Number: ME201915663
IN a world of globalisation, digitisation and social transformation, tax as a function can no longer watch from the sidelines. Gone are the days when tax leaders could focus on retrospective tax calculations and rough projections.
That’s according to professional services firm, Deloitte, which says many organisations are beginning to understand the need to be tech-savvy, data-driven, and predictive.
Drawing on its extensive experience of working with tax authorities and tax leaders around the world, Deloitte has compiled a report titled Building the tax function of tomorrow—today, which shines a spotlight on new technologies and offers some practical steps to help tax and finance leaders envision their road map to the tax function of tomorrow.
The report identifies three distinct pressures facing businesses and, more specifically, their tax functions: the digitisation of business, the evolution of tax authorities, and the continued demand for efficiency in the back office.
According to Mark Freer, Digital Leader for Deloitte Africa Tax & Legal “these three pressures are as applicable in Africa as they are in other jurisdictions”.
Pressure on the tax function may be rising, but the good news, according to Deloitte, is that recent technological advancements are enabling new solutions. In fact, tools and technologies are already forming the foundation stones and characteristics of tomorrow’s tax function.
Against this background, the report suggests five steps that tax and finance leaders could be taking today in order to better prepare the function for tomorrow.
Monitor regulatory and tax trends
Tax authorities are leading the way, offering strong signals of how tax will evolve over the coming decade or more. “In fact,” says Freer “the Tax Authorities in Africa are moving swiftly to a position of accessing data from companies closer to the source of the transaction and on more of a real time basis. This puts increased pressure on tax departments to ensure the data is correct before it is submitted”.
Envision your target operating model for Tax
Creating your operational vision for the future will be key to helping define and execute your long-term technology road map. Look outside of the traditional tax infrastructure to assess existing capabilities and technologies across the organisation that can be leveraged, especially in collaboration with Finance, and then develop your digital road map for Tax, recognising where you want to go in the long term, and how that can be achieved through practical and achievable steps. Focus on investments that solve immediate pain points while building toward the longer-term vision.
Start enhancing your data now
Given that the tax function relies upon every transaction housed in the data generated by the business, tax data requirements can help drive an enterprise data model that will support enhanced planning and analysis. “Remember that emerging digital technologies are only as good as the data they have to work with, however as long as all the data required by Tax is in one place, advanced analytics and artificial intelligence tools can provide the required insights and analysis, even though the data may not be perfect”, says Freer.
Generate internal support
Evolving into tomorrow’s tax function will require broad-based support from across the organisation. Building the business case for change will be critical, not only for generating internal buy-in for change programs but to secure the investment and leadership support that will be required over the longer term. Look for other large IT or finance initiatives (such as a move to cloud, finance transformations, or adoption of new outsourcing models) that can concurrently help your tax goals and objectives. On this note, Freer comments, “Tax departments rarely have the budget to embark on large projects of their own. It makes sense to collaborate with Finance or IT to ensure that the Tax requirements are included in wider projects. Also remembering that some of the newer technologies like robotic process automation (RPA) are relatively inexpensive.”
Cultivate the right framework
Given where most tax functions are today, the shift toward the tax function of tomorrow will require significant change management and leadership. This isn’t just about ensuring that existing employees and stakeholders go along for the ride. It is about creating a progressive, adaptive, and forward-looking culture within the tax function—one that not only instils confidence in every decision or task but continuously evolves and innovates as external pressures and technology models change. “This is one of the biggest challenges we face in transforming tax” says Freer. “Tax professionals need to embrace digital transformation and commit at a personal level to understanding how digital will automate and augment some of the work that they currently do”.
At the end of the day, says the report, it is important to remember that the transformation happening around you—shared data, social engagement, digital assistants, cloud platforms, connected devices—is not about people versus machines. It’s about human collaboration and impact made greater with machines.
People alone can’t do it. Technology alone can’t do it. It takes humans with machines, working together in a designed system.
“As the pressure for change on the tax function reaches a boiling point, the future offers tax leaders opportunities to not only relieve the pressure but also to change the status quo entirely. The goal: to turn tax into a source of agility, strategic insight, and even innovation,” concludes Freer.