Global tax compliance and reporting - insights and trends : resourcing
Welcome to Deloitte’s recent market research survey into the tax compliance and reporting landscape, a comprehensive, independently conducted research study that surveyed a representative sample of the largest multinational businesses across the globe, encompassing structured interviews with over 250 global tax decision makers. This was conducted in 2010 and again at the end of 2012.
This page covers resourcing and looks at our research studies past and present – as well as key insights gleaned from our direct marketplace experience – highlighting the most important findings, reflecting on developments and extrapolating our thinking on future direction.
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Executive summary - resourcing
It is clear that getting the right expertise in place is rarely a straight choice between in‑house delivery or outsourcing. Instead, hybrid approaches prevail, with a mix of internal and external resources deployed in a co‑sourcing model that ensure sufficient tax expertise is in place at every stage of the process.
In 2010, resourcing of global tax functions varied significantly. It was clear that outside the headquarter location there were often variable levels of in‑house tax expertise. Operating and reporting structures had usually evolved rather than been designed. They were largely determined by a mix of historical precedent, in‑house tax expertise in each country, the approach of the local finance controllers and local relationships with external tax advisors.
Consequently, as group tax directors sought to assert more control over tax compliance and reporting globally, it was clear that getting the right expertise in place was rarely a straight choice between in‑house delivery or outsourcing. Instead, hybrid approaches prevailed, with a mix of internal and external resources deployed in a co‑sourcing model that ensured sufficient tax expertise was in place at every stage of the process.
When it comes to the role of people and expertise in the process, it is clear that, as in 2010, the preferred model is a mixture of internal and external resources, largely predicated on what the company already has in place around its global operations.
In the case of US or European headquartered multinationals, we see a particular emphasis for external support emanating from their further flung operations, especially in Asia Pacific. This is often driven by the growth of their business into new markets (and a corresponding lack of local tax experience) or by the need to integrate new business acquisitions in emerging markets.
“ We have varying degrees of tax expertise around the world and we need external providers to fill the gaps.”
Anonymous, Tax Director
Resourcing in the future
Given the likely environmental changes, what will the resourcing impact be on both companies and providers? More and more, compliance and reporting processing work is expected to become automated, reporting on the tax sensitized data in ERP and other financial systems at source.
It is therefore likely that global tax department resourcing will remain relatively lean with a focus on retaining senior tax ‘experts’ at the global or regional HQ level. These professionals will work more closely with the finance function and engage actively with the wider business to demonstrate and deliver value.
Additional and ad hoc resourcing requirements will most probably be fulfilled by flexible use of external providers, perhaps with greater use of secondees at the local country level, to supplement local finance teams with local expert tax knowledge.
Despite the increasing role of integrated technology and automation, human resource will of course remain intrinsic to parts of the compliance and reporting process and the trend towards ‘offshore’ service centers will most likely gather pace as data and processes are standardized regionally and globally.
Current developments also suggest that greater use of low cost resource pools will be driven further by an increased sophistication in what we currently think of as ‘emerging’ markets. This will present itself both as a result of the demands that growing multinational companies will make in these regions (our research already suggests that one of the biggest shifts towards centralized models and more outsourcing is likely to be coming from Asia Pacific) and through the growing possibilities presented by more sophisticated and lower cost centralized resource pools around the world.
While India currently dominates, we expect parts of South East Asia and Africa to play a bigger future role, as the level and quantity of qualified expertise in these regions grows and the search for ‘untapped’ resource pools continues.