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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.
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.
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:
Expansion into new markets
Financial planning and forecasting
Business insight and decision support
External stakeholder expectations
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.
We can support tax functions to engage with finance transformation and position itself as a primary customer of that programme. Contact us today.