Tax as a strategic priority: Getting a seat at the table

Business model reinvention is imperative: Our 2023 CEO survey revealed that 63% of APAC CEOs believe their business will not be viable in 10 years if they remain on their current path and, therefore, reinvention of their business models is critical. They identify technology as the biggest driver of BMR, with 48% of CEOs in Australia planning to reshape their businesses in the next three years to adapt to emerging technologies, government regulation, and changing customer preferences (Source: PwC's 27th Annual Global CEO Survey ). Perhaps unsurprisingly, regulatory compliance is identified as the number one barrier to reinvention.

However, when it comes to the tax function, the home of one of the biggest constituent parts of an organisation’s regulatory framework, there seems to be a disconnect. CEOs, in particular, are not engaging with their tax teams on business strategy and businesses are not investing in the tax function. This is despite the rapidly increasing complexity of the tax reporting and regulatory environment.

These insights highlight both an opportunity for tax as well as the challenge. The opportunity clearly is for tax to find a way to get more involved in business strategy. To add value, reduce risk and help businesses navigate the regulatory challenges of BMR and, while doing so, secure the investment it needs in technology, resources and skills to meet current and future reporting obligations. The challenge is how tax teams achieve this. How can tax teams raise their profile and become more strategically relevant to the organisation? When tax has a seat at the table, it can be a win-win. However, there is an awareness gap between the business, finance function, and tax. Reframing tax and driving alignment with finance and the broader business on the value tax can unlock is key to achieving these win-win outcomes.

In this article, we will introduce some of the concepts that we are seeing some forward-thinking tax functions deploy with success.

To elevate tax operations, businesses must leverage technology and automation, which can streamline compliance processes, enhance accuracy, improve governance and provide real-time insights. Investing in tax software and automation tools enables tax professionals to focus on strategic activities rather than manual tasks. These advancements allow tax departments to transition from merely processing data to analysing it, thus providing strategic insights that drive business decisions.

In the past, tax automation has been the exclusive domain of tax software specialists - and since tax software was a specialist product, it required its own budget and its own IT support model. However, over recent years we have seen an emergence of tax capabilities housed in many of the modern Enterprise Resource Planning (ERP) and cloud technologies used across the market. This is a game changer. Firstly, it allows tax to be “mainstream”, leveraging the same technologies used by finance teams and adding to a wider value case for technology investment. Secondly, in an age where tax numbers increasingly need to be correct at source, for the first time, it allows for a more integrated, sometimes even native, connection between tax and finance systems.

Being open to trying technologies other parts of the business have invested in can make it easier for tax to also secure the automation it is after. We have even seen several cases where IT and finance teams have purchased licences for tax modules in ERPs without the tax team even knowing! So being close to your organisation’s technology roadmap and your finance and IT stakeholders is important.

Breaking down silos and fostering collaboration between the tax department and other key functions such as finance, legal, IT and business operations is crucial. We talked above about the opportunity for tax to leverage common technologies used by other parts of the organisation. The same is also true of process and operational alignment. We are seeing a number of tax functions start to lean into finance operating model change programs, such as the use of Global Business Service (GBS) models. Not only can these initiatives help alleviate resource constraints by shifting some tax compliance processes into a shared function, it can also free up tax teams to spend more time with their businesses. And whilst it might sound counter-intuitive, letting go of some tax processes can present an opportunity to refresh, strengthen and document key tax controls, and set clear roles and responsibilities across the organisation for tax compliance. Using common technology helps with this.

By encouraging cross-functional teamwork through better tech enabled operational integration, tax professionals can gain a deeper understanding of the broader business landscape and contribute more effectively to strategic planning and reporting. This integrated approach helps tax to become more embedded in more aspects of business decision-making, leading to more informed and cohesive strategies.

The evolving role of tax operations necessitates new skills and competencies. Leaders need to equip their tax teams with the knowledge and expertise needed to navigate the complexities of the modern tax landscape and the changing expectations of tax authorities. Upskilling tax professionals ensures they can proactively address challenges and seize opportunities through these transformation programs, and allowing staff to acquire competencies in data, AI, technology and reporting (beyond baseline tax technical knowledge) will help crystallise the strategic value of the tax function.

Experience tells us that when tax is connected with the business, more opportunities emerge for tax teams to participate in talent development and investments into new skills. In some finance functions, we are seeing tax take the lead on GenAI use case exploration and proofs of concept because it is a small enough area of the function to be nimble yet also demonstrate meaningful results. Getting tax staff involved in cutting edge projects can also have a big impact on job satisfaction and retention.

There is a clear opportunity for tax leaders to redefine the role of their function and make a stronger case for a seat at the table and the level and types of investment they need.

Three key priorities emerge: