Tax Transformation: Value Drivers of Change

What prevents tax professionals from maximizing their role as strategic leaders? For many, it comes down to lack of time and capacity. Corporate tax departments are stuck trying to balance demands from external forces with the reality of their day-to-day operations. For most, daily operations still consists of inefficient, manual, time-consuming processes and repetitive tasks. These tasks are often completed using outdated technology.

This is where tax transformation comes in. Fueled by technological innovation, growing compliance obligations, and competitive pressure, the revolution affecting tax has impacted businesses across all industries and countries. The tax function of the future will not only be drastically different from what it is now, but play an increasingly integral role in advancing an organization’s overall strategy.

As BDO well knows, balancing the need to streamline operations, increase stakeholder transparency, and advance company strategy amidst tremendous political, economic, and social changes requires incredible acumen, agility, drive, and technical know-how. Tax leaders must be prepared to not only respond to these unprecedented challenges and shifts, but to articulate how their department adds overall value to a business.

Below are the critical value drivers of change we believe to be most critical to tax transformation now, and in the years to come.

• Function: Sitting at the center of a tax liability minimization strategy, functions form the core strategic initiatives of a tax department. They include planning and strategy, strategic alignment, resource management, operations, and risk management and compliance.

 

• Value Driver: Value drivers are the benefits derived from optimizing each of the core functions. They can range from greater transparency and auditability to more accurate performance measurements to increased employee morale and motivation.

 
Robotic process automation (RPA), machine learning, data integration, analytics, and data visualization are five of the top forces driving tax transformation today. Independently, each technology helps tax departments optimize various functions, including transparency, process efficiency, communication, accuracy, and more.
 

• Analytics: Data analytics can provide organizations with a holistic view of their overall tax posture, flag errors and anomalies, and uncover actionable insights that can drive critical decision making and inform future tax strategy. Real-time analytics enable nimble responses to external changes, while predictive analytics can be used to model multiple tax scenarios.

 

• Machine Learning: Machine learning aims to mirror human intelligence by equipping algorithms with the ability to "learn" on their own without human intervention based on past experience and new inputs. Systems with machine learning capabilities are able to do a variety of sophisticated tasks, from answering increasingly complex tax questions to detecting fraud, identifying potential tax liabilities, and more.

 

• Data Visualization: Data visualization can help tax departments communicate complex data and ideas to internal and external stakeholders via intuitive, easy-to-understand visual and/or interactive formats.

 

• Robotic Process Automation: Software “bots” help the tax function streamline operations by eliminating repetitive, predictive, and labor-intensive tasks through the process of automation—enabling skilled tax professionals to focus on higher-level, more strategic—and less boring—work.

 

• Data Integration: Aggregating tax data from disparate systems, geographic locations, and functions into a centralized data management system is essential to ensuring the availability, quality, and timeliness of the information that flows to and from the tax function. Robust tax data management can help organizations meet growing tax compliance reporting requirements, reduce errors, and foster collaboration outside the tax department.

 

• Tax Minimization: Given the complexities of domestic and global tax regimes, seemingly small changes in business approach can have wide-reaching consequences to the various tax liabilities of a business. By taking advantage of emerging technologies and innovative processes, companies can minimize their total tax liability to thrive during this time of intense change.

 
Collectively, these technological forces help businesses recognize valuable time and cost-savings that can lead to greater enterprise intelligence, keener decision-making, and the ability to respond more rapidly to new regulatory obligations and changing market forces.

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