Chaos reigns in corporate tax departments

From the global push for a minimum corporate tax to a dizzying array of acquisitions to macro changes in politics and the economy, the tax services are feeling the heat, and it comes at a time when bandwidth is shrinking. already stretched to the limit.

Thomson Reuters’ 2021 State of Business Taxation report found that half of business tax departments report being under-resourced. Digitized tax returns, remote working, and new technology and automation projects have further increased the pressure, making the dynamics in these departments untenable.

This last part may seem troubling to the armies of software and business process automation vendors who have touted technology as the magic elixir for solving these problems. However, as we regularly see in real-world corporate tax departments, just because technology can automate a task in a vacuum doesn’t mean businesses are ready to implement it. Much like building a skyscraper on a bed of sand, trying to install a drastic technological upgrade in a corporate tax department that has yet to lay a solid foundation for it makes many of these projects. doomed from the start.

And this is a lesson. Businesses have learned over much of the past two years that it is not enough to have a lot of technology available; this technology must be synchronized and streamlined to meet a wide variety of use cases. Just buying point solutions and layering them on top of each other without any strategic planning on how the moving parts will work together can often create even more work.

Perhaps this is why more than half of the corporate tax professionals we surveyed described the current state of their tax departments as ‘chaotic’ (21%) or ‘responsive’. (32%).

The point is that many tax departments faced considerable challenges during the COVID-19 crisis, as their corporate resource planning systems, tax systems, and financial portals were designed to support functions. verticals and specific objectives. Unfortunately, in the decentralized world of enterprise-wide work-from-home operations, many of these systems were either inaccessible or incompatible, or just not up and running on time, leaving teams to settle for spreadsheets. Excel, approximations and intuition.

More often than not, even companies with a certain level of technological sophistication have found themselves cutting and pasting content from legacy systems, digging up files stored on individual PCs, and spending far too much time on workflows. clumsy and ineffective.

If corporate tax departments are to get the most out of their technology investments, they need software and data infrastructure that are flexible enough to meet the evolving needs of a distributed workforce and a changing workforce. constantly evolving regulation.

For many, that means taking data much more seriously. Businesses need to track granular and localized inputs and trends to inform strategic decision-making and anticipate needed leadership changes early on. Enterprise-wide data and analytics capabilities are no longer an advantage. The increasing pressure on corporate tax departments has made it clear that real-time information is essential not only to avoid costly mistakes, but also to discover ways to predict what will happen.

For others, the focus will be on compliance, implementing the tools necessary to automate the more labor-intensive components of tax collection and reporting. These include the calculation of the constantly changing local, national and local indirect tax rates at the point of sale and the automatic declaration of this information upstream.

Either way, as tax departments continue to face tighter compliance requirements, heavier workloads, and a divided workforce, it is critical that they approach new technologies less as a transaction than as a transaction. as an opportunity to transform workflows and prepare for the next crisis. .

The simple act of acquiring technology for the sake of technology will no longer fly. Buyers and sellers of corporate tax software need to recognize that we have now entered a world in which everything is intertwined. The back-to-school tax holiday in Texas, the new tax on digital services being implemented in Great Britain, the intangible income of Switzerland, the tax on the wages of a teleworker for a New York-based company residing in Florida it’s all tied together, and the corporate tax department needs to be able to report it. In real time.

Brian Peccarelli is Co-COO of Thomson Reuters.

Cover photo by Bob Levey / Getty Images for MoveOn
contributor, corporate tax, teleworking

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