Reframing tax

Putting tax at the forefront of strategic decisions

Colleagues discussing

The growing demands on businesses call for a far greater strategic role for tax operations than many currently have. Here, Stuart Higgins, Tax Markets and Services Leader, discusses the findings of our Reframing tax study - which looks at the goals and transformation challenges faced by more than 300 respondents and indicates the need to influence stakeholders differently to secure and protect benefits across the business.

By Stuart Higgins, Tax Markets and Services Leader, PwC UK

In discussions with clients and other organisations, it is very rare not to hear them highlight how critical transformation and technology is to their success both now and in the future. Our Reframing tax study shows that while tax is seen as a key area of focus for organisations, it isn't being prioritised in these two strategic areas - with those responsible for tax frequently noting that transformation is happening around them. Tax often ends up having to 'make do' with the outcomes of decisions taken elsewhere, resulting in strategic value being lost, processes becoming increasingly inefficient and the motivation of teams dwindling.

Our research shows CFOs are involved in nearly two-thirds of the decisions around tax technology. Meanwhile, more often than not, the Head of Tax is not involved in the decisions. It's also worth noting that CTOs, CIOs and CEOs hold almost as much sway in the decision-making process as the Heads of Tax. While this does show the strategic importance of making the right decisions around tax, it also flags the need for those responsible for tax to help the wider business understand their value and roles.

The focus on organisation-wide technology and transformation is clear from our 26th Annual CEO Survey, but when it comes to investing in technology - and most importantly upskilling and talent - tax is not a significant focus.

Where are CEOs investing in technology and talent?

Source: PwC's 26th Annual CEO Survey

This should be setting alarm bells ringing, because tax has never been more complex, critical to commercial decisions or fast moving. Departments responsible for tax are being swamped with ever increasing tax compliance burdens - think Pillar 2 for a case in point. As organisations transform, the questions they need to answer also evolve, for example: how to harness the power of Artificial Intelligence, optimise opportunities arising from the metaverse, transform their supply chains as they respond to ESG, or move to the cloud.

The complexity of these issues requires those responsible for tax to create strategic insight and value, and in doing so, help organisations make judgement calls. This ability to contribute effectively is put at risk however, when questions are raised too late because tax hasn’t been engaged early enough. This can also result in decisions around technology choices that result in the installation of technology that doesn’t deliver what it needs to.

Far from automating tax skillsets out of existence, transformation is a chance to augment business partnering capabilities and enhance the status and influence of tax within your organisation. We believe this human-led, tech-powered approach is key to creating successful, sustainable outcomes.

The way forward

It’s clear there is an opportunity for those responsible for tax to reframe their role and make a stronger case in their articulation of the level and types of investment they need. Three key priorities stand out:

Reframing the role of tax with a range of stakeholders

Our research shows the number of stakeholders influencing investment decisions for tax is very broad but our experience is that these different stakeholders will have different perceptions of the value tax could or does delivery – for example, strategic commercial insight versus administrative efficiency.

Connecting with these stakeholders, including those responsible for tax, to understand their expectations today and for the future, while also outlining the entirety of the responsibility of the tax operations, is often an eye opening experience for many. The breadth and volume of day-to-day risk management, compliance requirements and business requests often shocks many stakeholders. Make it a priority to agree with all stakeholders the role of tax - and reframe where necessary.

Reframe the technology needs for tax

How do your tax operations currently deliver, and how will this need to change to deliver the future state? It would be easy to draw up a lengthy shopping list of the investments - that is almost certainly going to include talent and technology. But even with a convincing business case for investment, there will be funding constraints. It’s therefore also important to look at options that may provide a short term solution without disrupting a longer term journey. Engaging with CTOs and tech teams at this point, in our experience, pays dividends

A clear case in point is looking at how to harness the tax capabilities available within ERP systems or the analytic tools that come with enterprise-wide subscriptions. Self-built tax systems and software should be the last resort.

Frame the investment ask and articulate the compromise

Even if those responsible for tax frame the transformation investment well, in our experience it is highly unlikely to result in an immediate sign off of the entire wish list. What it needs to include is a clear articulation of the consequence of not investing - this is not that common.

This is a critical step - once the group of stakeholders have agreed on the role of tax and set out their vision, they need to know what part of that vision wouldn't be achieved without the full investment. Do all stakeholders understand and agree? Do departments responsible for tax understand and buy in?

Only now should a roadmap be agreed on the how of the reframing journey. This approach is more conducive to aligning the tax roadmap with the firm’s overall transformation plans.

More from us

This article is one of a series designed to help those responsible for tax navigate their transformation journey. If you have any questions or would like to know more about redefining the role of tax in your business, please get in touch.

Reframing tax: Where are you on your journey?

Understanding your starting point is critical to finding the right way forward. Use our interactive tool to assess where you are on your journey to being human-led, tech-powered and access further content to help deliver greater business benefits.

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Stuart Higgins

Stuart Higgins

Tax Markets and Services Leader, PwC United Kingdom

Tel: +44 (0)7725 828833

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