1. Keep scanning the horizon
The global tax policy landscape will continue to move fast, as COVID-19 related policies are unwound, and new policies are introduced in governments’ ongoing drive to secure revenue. The first new policy should never absorb the team’s entire focus – because there may be another five new policies lurking around the corner. Some immediate issues commanding attention include audit reform, Environmental, Sustainability and Governance commitments by businesses, major changes in digital tax administration and the evolution of post-COVID-19 business models.
As such, “scanning” is the operative word here. While tax directors have to see enough of the global picture to analyze exposure to the unfolding compliance risk, it will be impossible to figure out the exact impact of every new policy as it’s announced. The true picture tends to emerge slowly, so the challenge lies in knowing when to double down on the detail.
2. Remain agile and flexible
With little clarity over exactly how tax policies will unfold and affect risk, tax functions need to build in agility and flexibility so they can move quickly to adapt to change and reduce controversy.
Prior to the pandemic, many tax teams were stuck in the comfortable routine of robotic day-to-day tasks. Now, the complexities demand a nimble tax team that’s responsive to a fast flow of emerging new priorities and has a core skillset that is globally, digitally and sustainably aligned with wider strategic objectives to continuously add value to the enterprise.
This is where the analysis of value and balancing the relative merits of in-house and co-sourcing arrangements proves incredibly useful. Tax functions should establish a model that gives their in-house talent the freedom to react intelligently to changing critical tasks while achieving greater agility by leveraging technology, too.
3. Get ahead in the war for talent
The pandemic has sparked unprecedented levels of employee turnover, as people examine their life choices, make different demands of work, and seek fresh challenges.
This is exacerbating a parallel shortage of tax professionals with the balance of traditional and new tax expertise – including the process, technology and data analysis skills that the future of tax demands. As such, attracting and retaining the right mix of talented people is becoming much harder, and these skills now command a premium.
But the businesses that find an advantage in the war for talent will win in the long term. Organizations need to develop a compelling plan for how they're going to attract and retain talent with the knowledge and skills to steer their tax function into the future. This means examining everything from remuneration and career development to company culture and values – and ensuring there’s no discrepancy between promises made and actions taken.
4. Review technology and data strategies
Technology is now playing an increasingly critical role in tax compliance, as authorities switch to powerful machine-learning-enabled tools to tighten the tax-filing process, improve the sharing of information between governments, and strengthen revenue collection.
So, tax functions must ensure they have the best systems in place to gather, collate, understand and share their tax data. This means employing multi-jurisdictional systems, powered by the latest collaborative cloud technology, to provide a holistic picture of tax across the organization, at a glance, from anywhere.
But the right technology really begins with a clear data policy. Tax data needs to be high quality and quick to pull together so tax functions can drive out robotic costs and leave their people doing more value-added activities. This is also crucial for drawing out the hidden extra value the data contains, which will help make the tax function a far more valuable contributor to the business.
It is incumbent on tax officials to educate their chief information officers and finance executives to ensure tax is embedded as part of any wider finance transformation projects and see to it that IT budgets include money for critical investments in tax automation. Too often, the tax authorities already believe businesses are more advanced in these efforts than they actually are, which can increase risk for laggards.
But remember, investing in technology, whether in-house or via a third party, isn’t enough on its own. Tax functions need to recruit people who understand it.
5. Put decision-making support in place.
While it’s very easy to get sidetracked by new obligations, reporting demands and skillsets, the tax function’s core role remains fundamentally unchanged: to provide decision-making support for the broader business strategy.
In the wake of the pandemic, there are huge opportunities for businesses to grow, access new customer markets, or reconsider their global footprints and supply chains. So, the importance of the tax role is increasing all the time.
As such, everything should be geared, first and foremost, to facilitating truly effective decision-making across the business – from the people that tax functions recruit to the processes they build and the technology they deploy.