As a tax function, you are required to deliver tax returns and filings on time. But your business now expects a lot more of you, and you need the right tools to meet those new demands.
The recent Thomson Reuters panel discussion, “Justifying ROI: Makings of a successful tax function and the role of technology” explored the evolution of tax functions across Australia, New Zealand and Southeast Asia.
Abs Osseiran, Corporate Tax Partner at Deloitte considers the essentials of meeting compliance and filing deadlines as part of the job. “This is your basic hygiene, and it needs to be done correctly.” Carrying out this work on time, and accurately, was cited by more than four in five (81%) as the top performance markers in the webinar’s first poll of 44 respondents.
“Once you have those services wrapped up, you can then break out from the traditional tax function model to partner with your business,” Abs continued.
“You can really add value to your organisation through providing that business partnering role, and working with your internal and external stakeholders to ensure that you’re really driving value for the business.”
Transforming the corporate tax role
Panellist Regina Wong, Tax Manager – Indirect Tax at Razer pointed to the increased pressures on tax departments created by the pandemic. The introduction of JobKeeper and similar support schemes have increased workloads for many corporate tax departments with headquarters in Australia, added Abs.
With the move globally to a digital economy, governments’ coffers have been depleted by the drop in physical sales, Regina explained. So to improve their tax base, governments are introducing new regulations to ensure they get their tax cut from online transactions.
For businesses operating in more than one country, Regina said it means that tax departments need to keep on top of the many new regulations that impact their business in each relevant jurisdiction. This concern was reflected in Thomson Reuters’ 2021 State of the Corporate Tax Department report, recording that among the departments with responsibility for indirect tax, which included half their sample, nearly three in five (57%) were anticipating major government change.
In fact, four in five (80%) among 50 polling respondents selected regulators and tax authorities as the stakeholders that are driving them most to introduce technology to their department.
This pressure on tax functions is compounded by the growing demands from technically sophisticated tax authorities. “They can sometimes know your tax data better than you do. So, you need to keep up to date and ensure the data is coming back to the tax team, ready to answer the tax authorities,” said Regina.
“You need to make sure you’re monitoring the business progress and the impact of tax implications. If you can’t demonstrate a thorough knowledge of your business, this could lead to a formal audit,” she warned.
Further, in an increasingly global environment, regulators are progressively sharing information with each other, reminded panellist Kimberley Simpson, Vice President Global Tax & Treasury at Cochlear Limited, which she said can add to the compliance burden for tax functions.
Unfortunately, this heightened workload has to be carried out with a limited or capped headcount, and in many cases overseen by an intransigent CFO.
As Abs observed “tax departments are really stretched at the moment”.
Technology as the enabler
As businesses are expecting more from their tax departments, innovation can serve to help solve some resourcing constraints. This is the time for tax functions to take the reins and adopt a strategic approach to consider how technology can be the enabler to navigate these challenges, optimising value for their organisation.
In the webinar’s second poll, three in four respondents (75%) revealed their tax department would introduce technology or automation to handle their future challenges.
“To increase our business partnering activities, we need to be able to offload or automate some of these compliance processes so that we’re not bogged down by them,” said Regina.
Her experience at Razer of adopting ONESOURCE Tax Determination has meant that in the indirect tax space, having an automated solution in place to calculate taxes has reduced the tax rollout for going to market in a new country, giving Sales and IT teams more time to focus on serving the business. In addition, being able to supply tax data to the Finance teams faster has meant they’ve been able to close their books on a more timely basis.
Regina reinforced the cross-department benefits of ONESOURCE at Razer. She drew on her experience of when the business pivoted in its offering and the tax team needed to know how to support the new growth. As sales grew so did the challenge of getting on top of the increasing amount of data.
“You really need the buy-in from so many teams – the finance, supply chain, business and IT teams – to provide the information you need. But it can be challenging. If you have technology in place, then it makes it a lot easier to collect it all in one spot.”
Building a business case for your tax team’s future
In building a business case to introduce a technology solution, Abs pointed out some of the many financial benefits – and the non-financial pluses that are often underestimated.
He referred to the value of:
- Minimising the risk of breaches by automatically meeting compliance requirements
- Having a data trail at your fingertips in the event of an audit
- Leveraging clean data to provide analysis and insights for the CFO and wider business
- Real-time data from ERP solutions.
Further benefits that technology brings to the tax team include, as noted in the 2021 State of the Corporate Tax Department Report, saving time (27%), creating efficiencies (19%) and reducing the risk of errors (12%).
“A tax function can really start to show how it is driving value for an organisation beyond just cutting and producing numbers and handing them off. Rather, it’s the analysis of those numbers and the insight as to what that means for the business. That’s where technology really can help,” said Kimberley.
The non-financial benefits include the impact on the organisation’s risk profile. “What price do you put on your company being on the front page of the paper, for not paying its tax on time, or because your numbers were wrong?” asked Abs, who also cited the importance of technology in energising the workforce, by empowering them to engage in higher-value work.
Leveraging your “seat at the table”
“Ideally the best time to argue for the adoption of a technology solution is when an organisation is going through a business process transformation or upgrading their ERP,” said Abs, citing his first-hand experience as Head of Tax.
“You really need to have that seat at the table to drive the technology change as part of the ERP implementation. Because finance is focused on making sure the journals work, they don’t see the tax elements.”
Kimberley, who’s been using ONESOURCE for years at Cochlear fully supports the need for tax functions to have an influential seat at the business table. But once you get the go-ahead for technology adoption, she has some firm advice.
“You have to really think about what that solution is going to bring to your tax function, making sure you’ve got strong processes and a good understanding before you bring that solution in. And then be prepared to have a period of time to work through it, and you’ll get the full benefits of the implementation.”
“Technology’s the way to go for me,” she concluded.
Find out how ONESOURCE Tax Determination can transform the future of your tax department. Contact a Thomson Reuters consultant today.