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Reimagining the way tax operates for the future

How tax leaders can rise to the challenge and emerge more resilient

For most companies, 2020 was a year of turmoil. The global economic slowdown caused by the pandemic has left no country or business untouched. Tax leaders already face disruption with the emergence of new business and operating models, and the varied challenges posed by rapidly changing compliance obligations and evolving international tax policy. However, the pandemic isn't the last disruption tax leaders will face. A turbulent future demands agility and flexibility to enable tax to adapt quickly to disruptive business circumstances. The tumultuous events of 2020 has caused organizations to reassess the resilience of their strategy and created momentum to transform and prepare for the future of tax.

There are steps that tax leaders can take to reset and transform how they operate post-crisis to address current challenges, embed resilience for future challenges, and accelerate change in the tax function.

There are three important questions resilient tax leaders must address to build greater resilience into their own tax function and position for the future:

  1. How to help the business transform and thrive?
  2. How to transform the tax department?
  3. How to manage risks and uncertainties?

How to help the business transform and thrive?

With the legislative, geopolitical, and business landscape increasingly complex— and moving at an ever accelerated pace —transformation is a fact of life as businesses strive to recover from the current crisis and begin slowly returning to different types of business as usual.

Amid this uncertainty, resilient tax leaders demonstrate the most value when they quickly adapt and pivot in response to disruptive events by taking decisive action— with courage. This is especially so when decisions are made while circumstances are changing, because this is when expediency is not just helpful, but is often critically essential.

Agile, high-quality decision-making has helped organizations transform at a pace that would have been unimaginable before the crisis. It has also revealed the need for implementing and effectively using advanced technologies such as robotic process automation for greater efficiency. Resilient tax leaders must build on what they have learned during the crisis and engage and support the wider business with a decisive and business-centric mindset.

Recommendation 1

There are a range of tax considerations that impact many business activities: The global supply chain, operating and digitization models, M&A opportunities, and shifts to the future of work. Tax leaders must embrace a long-term view to deliver data-driven insights to the entire business and, work to embed change across the team to ensure responsiveness in an agile environment with new operating models aligned to digitalization plans across the wider business.

How to transform the tax department?

The tax department will continue to evolve and resilient tax leaders will need to rethink and plan for how to accelerate the digital transformation of the function. This may entail looking at ways to implement and scale automation capabilities to manage repetitive tasks; exploring how to use data more effectively to generate insights, or how to outsource parts of or even the entire tax function, and manage remote tax teams.

Recommendation 2

Accelerate digital transformation to enable greater flexibility in tax operations. Benchmark the tax department's performance, and use those metrics to inform the transformation, and develop a strategic digital roadmap for the short, medium, and long term.

How to manage risks and uncertainties?

Tax policy has—and will—continue to play an important role in addressing the economic fallout from the pandemic and building back economic strength. Navigating the challenges and uncertainty created by evolving tax policy are not new for tax leaders.

Managing risk and uncertainty starts by managing tax compliance across all markets. On top of this, resilient tax leaders should build the compliance considerations of tax policy changes into 'business as usual' processes, and make sure local teams are up to date on tax developments and fiscal measures.

Combining strong tax compliance with an effective digital tax strategy allows greater insights into tax risks, and allows tax departments to build and share insights with the rest of the business about where potential risks are likely to occur in future.

Recommendation 3

Managing uncertainty as both the business and the tax function transforms and as potentially divergent global and domestic policy changes are implemented, requires a unified tax department across jurisdictions because keeping an eye on tax policy and regulations are highly relevant wherever you do business.

Consider additional resources (internal or outsourced) to manage periods of greater tax authority scrutiny, especially as governments look to pay for deficits caused by the pandemic. Building flexibility into tax resourcing can help manage low value activities, freeing tax leadership to deliver increased business value through future-focused insights to the entire organization.

One of the effects of the crisis will be a widening divide between leader organizations and the rest. The critical task for a resilient tax leader is to focus ruthlessly on what really matters to business performance and assess how the tax department can facilitate and enable it.