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We’ve all heard it said, “the only constant is change,” and tax departments in 2023 know this all too well. Keeping up with the ever-changing business landscape — particularly around technology and data capabilities — is a full-time job no matter how big or small a company is or what industry it’s in.
In this turbulent business environment, tax leaders need to push forward on many fronts amidst fast and disruptive business change. They must consider tax’s role in enterprise resource planning (ERP) upgrades; access complicated data; manage global operations; keep tools up-to-date; and navigate a market overrun with third-party technology tools — all while trying to make sure tax reporting and requirements are on time and accurate. Combining these considerations with new, ever-updating regulations and global staffing challenges presents a difficult time to be a tax leader.
Tax leaders need a panoramic view of the business and its tax obligations across the global organization. They need to engage early in significant business initiatives to ensure tax compliance and enable efficient downstream tax processes from the outset. And, they need the data, systems and processes in place to support business leaders in risk-based decision making and in taking advantage of the upside of risk. To achieve these objectives, tax leaders need to analyze their department and consider two paths for their future tax technology and people infrastructure. Should they “build up” in-house capabilities or “buy” an outsourced solution?
Building or improving an in-house infrastructure internally allows for a truly company-centric solution, with tax department investment tailored to the company’s unique specifications. However, continued maintenance cost and time can be a challenge as change is happening at a breakneck speed.
When building a solution, tax leaders should consider how they can be future-focused, scalable, and agile as change and innovation moves forward and talent availability continues to ebb and flow.
Buying a co-sourced, outsourced, or managed services solution allows a company to leverage a proven technology platform and bench of tax professionals to move quickly and eliminate the continued cost of upkeep. However, buying a solution requires a trusted provider who will enable the right level of control and governance.
When buying a solution, tax leaders should consider how they can retain control, get a comprehensive, tech-enabled solution, and best supplement their in-house teams, all with the option to bring it back in-house at a later date.
While more companies are choosing to buy in response to the challenges discussed above, the choice to build or buy will be different for every company. Tax leaders should consider what their function will need to look like in the short, medium, and long term to best inform the path forward. This will require determining what technology tools they need today and tomorrow, what capabilities their personnel have today and what potential shortcomings may be in a changing world. This level of tax department transformation — especially in the current technology landscape — offers a wide variety of improvement opportunities. For example, tax leaders can:
- Increase return on investment by including tax in the ERP upgrade: Virtually every company is upgrading or implementing a new ERP system. By including tax in these upgrades, companies can supercharge their ERP investment, optimize tax data storage, and minimize risk to downstream tax processes.
- Transform data processes: Accessing and providing data can prove to be challenging. This level of transformation is an opportunity to create a well-structured data lake to make sure the data is always in the right place, whenever it is needed.
- Integrate all tax compliance into a single solution: Bringing all tax compliance obligations — regardless of type of tax — to a single team will help reduce administrative burden, illuminate opportunities and insight, and supercharge how data gets used — all while reducing tax risk.
- Enable regular tax technical insight on a global scale: With rapid change to regulatory requirements and new requirements with regards to Environmental, Social, and Governance (ESG) initiatives and the Global Minimum Tax, it’s never been more important to keep pace.
In this fast-moving, uncertain environment, a trusted advisor can help tax departments weigh transformation options, improve results, and future-proof tax for years to come. Whether you build or buy a solution, your future-state tax function will rely on the right technology and operating tools to be agile in the face of ever-changing regulations. Now is the time to rethink tax operations to get better control, elevate your strategic view, and make sure tax is an asset.
© 2023 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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Jorgen Broothaers
Partner, EMEA Tax Reporting & Strategy Leader, Partner, PwC Belgium
Tel: +32 473 91 02 06
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Partner, APA Tax Reporting & Strategy Leader, Partner, PwC Australia
Tel: +61 2 8266 2935