Tax reporting: The future will be automated

How companies can keep pace with an ever-changing tax landscape

Data and technology will reshape the tax function of the future. This will require new skills and automation capabilities and create opportunities for tax to create value beyond the return.

Technology is becoming the key differentiator in tax function success as companies accelerate their shift to digitized and automated solutions to meet the ever-increasing compliance burden. For many companies, this technology transformation often exposes gaps in their current tax and finance systems, data and processes. But companies that reimagine their processes and take a connected compliance approach can quickly fill those gaps and generate value in an ever-evolving tax landscape.

PwC’s recent global Future of Tax Survey shows just how fast businesses are accelerating their move toward technology-enabled tax reporting and compliance. More than two-thirds (69%) of respondents said they would make more use of technology to respond to tax complexity and the increasing compliance burden. And 63% said they would invest in upskilling and reskilling employees.

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Tax functions look to technology, upskilling to meet increased responsibilities

Making more use of technology

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Upskilling / reskilling existing staff

%

Recruiting

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Outsourcing

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Question: How are you planning to respond to increased tax reporting and compliance responsibilities?

For the biggest companies, the need for new technology skills is especially urgent. Among companies with US$5 billion or more in revenues:

95% plan to increase their use of technology
86% will need more technology skills within the tax function in the next three years
69% need to upskill their staff in new areas, such as data analytics

“Business as usual is no longer an option for the tax function. They really need to turn to technology.”

Vik SachdevTax Transformation Leader, PwC Canada

Keeping pace with an ever-changing tax landscape

The pace of change in the global tax landscape makes this increased use of technology a necessary transformation. It’s highly unlikely that companies will be able to manage the workload of Pillar Two, corporate income tax reforms in Canada and the United States, the European Union’s Corporate Sustainability Reporting Directive (CSRD) and country-by-country mandatory sustainability disclosures without equipping themselves with technology to automate much more of the compliance process. After all, this growing complexity and level of change means the workload of the tax function can easily double. And, as organizations face resource and budget constraints, they’re unable to respond by simply doubling their tax compliance headcount.

Many companies have been slow to embrace technology transformation in tax in part because it’s been difficult to demonstrate the return on investment for automation. But as regulatory expectations grow, perspectives are changing. Organizations no longer question the return on investment, but rather the cost of not investing.

There are relatively low-cost technology implementations available to corporate tax functions, including off-the-shelf tools such as data management software that can save countless hours of manual work in preparing data for tax calculations and filing. But despite the great improvement in tax tools available in the current generation of ERP offerings, there’s still no plug-and-play solution that solves all the complexities of corporate income tax or environmental taxes for a large cross-border business.

As a result, companies need to work with dedicated tax technology providers and explore new outsourcing models. Our recent survey confirms this: 35% of the largest organizations (those with US$5 billion or more in revenue) said they would turn to outsourcing to accelerate change. For many companies, gaining immediate access to technology and data specialists through outsourcing or a managed services provider is the only way to improve real-time reporting and shift the tax function’s focus from historical reporting to forward-looking insights about regulatory changes and how they affect the business.

“Speaking to outsourced providers about how their services can be combined with in-house resources and skills can help organizations transform quickly and efficiently.”

Alina AchyPartner, pension funds, private equity and Connected Tax Compliance, PwC Canada

A connection that creates value beyond the return

The time to address these proliferating compliance demands is now, and we’re ready with collaborative solutions and services including our Connected Tax Compliance practice. Companies recognize that their total compliance technology investment cannot and should not be borne by organizations on their own. It needs to be done at scale by specialists that combine software and tax skills. Collaboration for compliance makes business sense because it allows companies to focus on their core operations.

Connected Tax Compliance meets companies where they are, regardless of their skill sets and position on the tax technology implementation curve. We can accelerate and cut the cost of compliance transformation by bringing new technologies, implementation experience and a global knowledge network to a business as it exists right now.

Tax compliance is changing, and much faster than before. That means it’s the time to accelerate transformation.