Tax Business Integration - Carrots and Sticks

A good tax function is not a “nice to have”. It can literally mean the difference between being able to do business or not. Loss of license to operate...now that tends to sharpen the senses. With the increasing digital requirements from Governments (such as eReporting & eDelivery notes) in some countries you can't even move goods out of your own warehouse to your own customers if you don't meet specific requirements.

So, muddling along with poor quality data and an army of spreadsheets is no longer a viable long-term strategy for an organisation. Evolving market pressures, changing regulations and disruptive events such as Brexit are just some of the factors putting pressure on businesses to transform. We have seen large numbers of organisations, both private and public, undertake significant programmes of digital transformation. Senior management has, at considerable cost and a lot of work, pushed harder than ever for their organisations to reimagine and restructure how they do business.

That needs to happen for tax as well. And whereas some justify the needed transformation using a legal and statutory stick, others also consider the carrots of better information sooner, lower cost to serve, and improved service to the business.

To make these digital transformations happen, organisations will often engage a system implementor (“SI”) to make sure all the technology works together and to ensure they align themselves with current business realities. Many organisations also recognise the need for these programs to be business-led - and to that end have business integration (“BI”) specialists leading the charge - keeping the business happy and the SI on their toes.

A Tax BI can help tax functions work smarter not harder, and ensure the processes and the technology is working for them, not against them. No more swimming against the tide. Ensuring that tax can do its job better (as well as cheaper) is rarely prioritised in transformation plans. But it should be.

Just as an SI ensures all the technology pieces fit together for optimised business processes, a Tax BI ensures pieces and processes are optimised for the best tax function. And that process starts by really assessing the current state of tax in the organisation, determining what the end goal looks like and then working out how to get there.

“The most successful business transformations are undoubtedly business led and supported by people with experience (and battle scars) to help predict and avoid pitfalls. I’ve led a number of finance transformations and having tax support embedded in 02C, P2P and R2R has proved invaluable, especially in the increasingly prevalent digitalisation of the tax agenda. 
Sam Waller PwC Finance Transformation Partner

The biggest problem around this? Ultimately it’s time.

Tax departments tend to be involved late and/or are not involved in all relevant workstreams; in fact the latter is often impossible as the workshops may run in parallel to a very tight schedule and the tax team’s are already in high demand with their day job. In addition, the tax representative can also be a little blindsided by the tsunami of (often last minute) requests to provide input. In reality what this means is the SI is increasingly unlikely to receive detailed requirements that are much more forward thinking than a copy and paste of what they already have. And that’s a crying shame.

Nobody would expect an SI to take on a large digital transformation project without an audit of the current tech. It’s foundational to success. So why would a tax function risk spending a lot of money to incorporate the current, sub-optimal practices into the transformed organisation?

Whilst the idea of using a tax BI may be new to the business, tax function’s have leverage to make the case both because of the legal and statutory stick and the carrots of lower cost to serve and improved service. So please do remember tax has that sort of power behind it, and use it wisely. You are both a customer of the finance function, and a true business partner - and your engagement and input is critical to any successful business transformation.