The Tax Function of the Future

PwC ran an interesting webinar last week (watch the replay here) on 'The Tax Function of the Future'. This was the first of a series of webinars on this topic and they have also released the first in a series of reports on this.

The over-riding message was that the tax function in an organisation has a broader responsibility to more stakeholders than ever before, and this is likely to increase rather than abate in the future.

PwC's predictions for the tax function of the future:

There will be more legislative requirements on transparency - we are not at the end of this yet. Issues that need to be considered in relation to transparency include:

• How will you capture any data required to support this?
• How will you communicate what that data says about the organisation?
• The tax authorities around the globe are getting better at analysing, mining and sharing data.

Regarding risk and governance, the reasoning for business decisions will be vital as the information is likely to be publicly available in future.

• There could be a legal requirement for a tax control framework in future (Spain is already looking at this)
• The OECD currently looking at a formal tax control framework
• A tax control framework should involve a risk register, identify controls, and show how you manage these risks, as well as covering communication around tax internally and to external stakeholders, and monitoring/testing. (See the tax conference slides on tax risk registers).

PwC believes that investment around tax data gives you the 'most bang for your buck'. What do you need from tax data?

• Data needs to be available in a 'tax ready format'
• Tax ready data can come either through the ERP system or by creating a 'tax data hub'
• The cost to do this work has changed over recent years
• An ERP solution is the best route if this can be optimised
• You have got to have confidence in your data and know where it's coming from and that it is accurate

Technology is a key enabler so you have to engage with this.

• This reduces reliance on spreadsheets
• It can also help with better risk identification
• The speed of change, such as needing to report in real time, means engaging with technology can allow the tax function to better support the business

Other points mentioned were:

• More companies are outsourcing compliance processes.
• Organisations will have to embrace tax, tax risk and tax management as a whole organisation
• We can't stay in the position where the tax authorities use our data better than the organisation itself does and therefore potentially knows more about the organisation.

Tips:

• Use your IT as early as possible to test new reporting requirements
• Tax shouldn't work/change in isolation, it should work with the whole organisation
• Tax should work with Finance and IT
• Tax input should be embedded when business decisions are made