The need for tax and C-suite alignment is paramount, given that tax decisions can impact the bottom line. A well-developed tax compliance function that starts with an organized data strategy can support multiple business initiatives, including mergers and acquisitions or restructuring, supply chain management and planning for new business ventures, when incorporated early.
While an organization’s compliance function focuses on managing growing complexity, such as Pillar Two, it can and should also deliver data-driven insights that support business transformation. Undertaking any business transformational effort without considering tax implications could result in higher costs and greater overall risk. Consider the following instances:
- Cloud transformation: Significant efficiencies can be gained across the business when tax is integrated into enterprise-wide transformations, and it’s an opportunity for tax leaders to work closely with the Chief Technology Officer (CTO), Chief Information Officer (CIO) and Chief Financial Officer (CFO). Configuring enterprise resource planning systems for tax during cloud upgrades can help you deliver tax-ready data and help improve the C-suite’s ability to quantify the return on investment for your digital spend.
- Supply chain and logistics: As heads of various supply chain, logistics or procurement owners look to reduce inventory delays and manage costs, a conversation could point to opportunities within the tax landscape. The location of inventory title transfer could have an impact on the company’s effective tax rate. In addition, the cost of cross-border customs is often a hidden expense where substantial value can be unlocked as part of a reorganization.
- Growth planning and structuring: Strategy discussions around portfolio alignment and business growth shouldn’t be limited to business development, the CFO and the corporate development team. The tax leader can also be a key participant. In addition to global reporting and compliance considerations, tax structuring opportunities could provide opportunities to improve your tax profile and enhance the deal value. The global operating model and jurisdictional footprint are important considerations that will likely influence the overall cash tax rate.
Each of the business objectives referenced above is within the tax leader’s purview. It’s important for your business to embrace a networked organization mindset that can foster cross-functional problem-solving to tackle these issues and others with tax having a seat at the table.
Tools and talent required
With the right technology investments, tax teams can formulate data-driven analytics and insights to allow tax to be more relevant in the assessment of business objectives. An organized data strategy that leverages centralized technology platforms can help offer a view of data across your organization and can facilitate data re-use and efficiencies, helping to give you greater insight so you can make decisions that impact your business.
Technology is only one piece of the puzzle. Tax functions also benefit from holistic solutions that connect your tax operating model, including people, processes, technology and data. Understanding and balancing the roles of technology and resources can help companies meet the objectives of a tax function. The right investments can yield measurable value across the business year after year and enhance strategic business endeavors — from mergers and acquisitions to new sources of capital — all while helping to strengthen day-to-day tax compliance efficiency.
Data-driven connections
Tax functions typically prioritize compliance, and the requirements are only becoming greater with constant regulatory change and calls for more transparency. And many companies continue to expect more from their tax function. Doing more with less requires a well-organized, tax-focused data strategy. Not only can this help establish more efficiency in the compliance process, it can also allow for greater visibility into the impact of business changes and a better understanding of tax consequences as part of the change evaluation.
Let’s talk
Shari Forman, Tax Compliance & Private Tax Services Leader, PwC US, and Alina Achy, Connected Tax Compliance, PwC Canada
For more information, please visit our Global connected tax compliance website.
