Tax Business Integration – Carrots and Sticks
Good tax functions are not “nice to have”. It can be the difference between being able and not to do business. The loss of a license to operate can be very disruptive. You can’t move goods from your warehouse to customers in certain countries due to the growing digital requirements of Governments, such as eReporting and eDelivery notes.
It is not a long-term strategy to continue to rely on poor data quality and an army spreadsheets. Businesses are under increasing pressure to change due to changing market conditions, changing regulations, and disruptive events like Brexit. Large numbers of public and private organisations have undertaken significant digital transformation programs. At great cost and with a lot more work, senior management has pushed for digital transformation in their organizations.
This is also true for tax. Some people justify the need for transformation with a legal or statutory stick. Others consider the carrots of better service, faster information, and lower costs to serve.
Organisations will often hire a system integrator (“SI”) in order to ensure that all technology is compatible and aligns with business realities. These programs must be business-led, and many organisations recognize the importance of having business integration specialists (“BI”) leading the charge to keep the SI and business happy.
Tax BI is a tool that can assist tax functions in working smarter, not harder, and ensuring the technology and processes work for them and not against them. There’s no need to swim against the current. In transformation plans, it is not often given priority to ensuring that tax does its job more efficiently and cheaper. It should.
A Tax BI optimizes processes and technology to ensure the best possible tax function, just as an SI makes sure all technology pieces work together. This involves assessing the tax situation in the organization, determining the ultimate goal and then working out the best way to get there.
“Business-led and supported by experienced people (and those with battle scars) to help avoid and predict pitfalls are the best ways to achieve business transformations. I have led many finance transformations. Having tax support embedded in 02C and P2P has been invaluable, especially with the increasing digitalization of tax. Sam Waller PwC Finance Transformation Partner
This is the biggest problem. It’s ultimately time.
Tax departments are more likely to get involved late or not in all work streams. In fact, the latter is often impossible because workshops can run simultaneously to very tight schedules and tax teams are already in high demand. The tax representative may also feel a bit overwhelmed by the flood of requests for input, which is often last-minute. This means that the SI will not receive specific requirements that are more forward-thinking than copy and paste from what they already have. It’s a terrible shame.
An SI would not expect to undertake a large-scale digital transformation project without a thorough audit of current technology. It is essential for success. Why would a tax function spend a lot to integrate the sub-optimal current practices into the new organisation?
Although the idea of using tax BI is not new to businesses, the tax function has the leverage to present the case. They have the legal and statutory sticks and carrots of better service and lower cost. Remember that tax has a lot of power, so use it well. Both you and the finance function are customers, but also a business partner. Your engagement and input is crucial to any business transformation.