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Why tax should be part of a finance transformation

10 May, 2021

Finance transformation presents risks and opportunities for tax functions. Both organisational and finance change programmes impact on the tax function's ability to continue to remain tax compliant. The data, systems and processes which the function relies on to deliver compliance and reporting will be impacted.

Working in tandem with finance and leveraging enterprise investments in technology will be the basis for a new-era tax function.

Aerial view of the Spire, O'Connell Street in Dublin, Ireland. Sunrise.

Integrating tax in finance transformation

Tax relies on data provided by finance functions, as well as systems maintained and processes established by finance. Tax authorities impose legal obligations on senior finance personnel and require data from organisations directly from finance systems (e.g. SAF-T requirements, real-time reporting). Tax, and the wider organisation, can’t deliver its legislative commitments effectively if it accepts data from finance that is not suited to its requirements, or where finance processes inadequately support the tax function.

What is driving the need for transformational change?

Many companies today are considering a focused or large-scale finance transformation. Below are some of the drivers for change that are impacting the finance function as a whole, including tax:

  • Cost pressures

  • Process inefficiencies

  • Expansion into new markets

  • Regulatory environment

  • Business alignment

  • Financial planning and forecasting

  • Business insight and decision support

  • External stakeholder expectations

How will these challenges and changes impact tax?

When transformation occurs successfully, the benefits and opportunities can be significant. The following describes some of the potential outcomes of change:

  • Elevating the quality and availability of data

  • Enhancing analytics for better decision-making

  • Boosting enterprise resource planning (ERP) and process functionality through tax reporting and automation

  • Aligning tax strategy with business priorities

  • Leveraging talent in new ways

A finance transformation project is an opportunity for tax to define those requirements. A key success factor is the ability of tax to position itself as a primary customer of the finance transformation programme.

To achieve this requires:

  • comfort with the language of finance transformation

  • a commitment to working with and influencing finance leadership and relevant experts, and

  • a clear recognition of the importance of success.

Tax functions should seek support to improve their literacy with finance transformation project terminology, how to define data and business requirements in this context, and to understand the fundamentals of how such programmes run.

Tax can establish itself in an integrated role in the programme governance, ensure authority to sign off and review project stages and obtain appropriate resources to ensure tax requirements gathering, design and testing is adequately covered for tax.

In many cases work may be required to define the business case for tax’s involvement and to bridge the comfort gap experienced between both traditional tax practitioners, and traditional finance and IT practitioners.

The road to transformation may not be easy - many practical hurdles must be overcome. However, when tax is closely integrated into broader finance initiatives (albeit large or small), the return on investment can have significant impacts that the organisation will realise for many years to come. The potential benefits will impact not only above and below the line costs, but also enterprise wide risk management, improved cash flow, and better governance. Participation in finance transformation will enhance the ability for tax to be an even more valuable strategic organisational asset.

Five key actions to take right now

  1. Determine what current finance transformation activities are happening or are being discussed (large or small). 
  2. Evaluate the current business state – what are the C-suite priorities, and how should they be reflected in the transformation roadmap? This includes an understanding of funding availability and limitations. 
  3. Prioritise upcoming challenges and risks that could have a significant impact on tax resources and capacity. As an example, how do global real-time and near-time reporting requirements impact the tax function - do tax have the processes ready to manage these new requirements, and how are broader finance transformation efforts impacting this? 
  4. Pinpoint high-level roadblocks (internally and externally) – what are the impacts and how can they be mitigated? 
  5. Document current tax requirements – identify key information flows, process times, as well as known ‘trouble’ areas that tend to be problematic every year.

We are here to help you

We can support tax functions to engage with finance transformation and position itself as a primary customer of that programme. Contact us today.

Contact us

Johnny Wickham

Director, PwC Ireland (Republic of)

Tel: +353 1 792 5262

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