Tax Transformation With Cloud ERP | Deloitte US has been saved
As enterprises assess their evolving business needs and embrace digital transformation, Tax stands at the cusp of delivering transformational business value. Tax departments can leverage their enterprise’s digital transformation projects as a spark to reimagine the Tax function and integrate Tax with other business processes. Further, digital business transformation, enabled by cloud ERP, creates an opportunity for Tax to achieve the changes necessary to meet future compliance challenges, manage risk, and provide insight into global tax positions.
Tax is transforming itself in response to several drivers that have developed in the last few years.
Deloitte’s latest report, Tax transformation trends: Technology in focus, shows that 70% of the Tax leaders surveyed predict that revenue authorities will have more direct access to their systems within three years.1
For years, cloud ERPs have been critical in an enterprise’s business transformation journey. Tax must collaborate with business functions to join the transformation journey. Tax is often viewed as a back-office process, which may undermine its potential to derive business value and cost savings. Moreover, in many business digitalization cases, ERPs have not been optimized for compliance, which has created the need for stand-alone tax technology solutions operating alongside ERP systems but not fully integrated with them.
Cloud ERP solutions are reimagining tax compliance to reduce the time lag between business processes and tax operations. Through cloud transformation, tax departments can showcase their business value and find new ways to be compliance ready through real-time insights into tax risk and predictive analysis to support future business decisions.
Enabling business transformation
Cloud-led digital business transformation presents an opportunity for tax departments to embed tax requirements into business processes and create a sustainable foundation that can adapt to future compliance needs.
At the core of cloud lies a universal journal that becomes the single source of truth across financial, direct tax, transfer pricing, and management accounting data. This foundation, reconciled by design, supports direct tax needs from internal business requirements to actuals, consolidation for income tax preparation, and predictive analytics. Multiple tasks can be executed in real time (for example, intercompany, currencies), providing ready-to-refer data for Tax without waiting for lengthy closes.
Leveraging ERP opportunities
Cloud adoption can help mitigate the risk of data misalignment in records needed for compliance and audit requirements. It can also help Tax to “go digital,” helping to create business value and be ready for ever-changing compliance requirements. The Tax function can leverage cloud to enhance operational efficiencies and to generate data while adding strategic business value.
Tax: Entering a new market
Cloud adoption for Tax can help businesses gain the much-needed agility to enter a new market. A market expansion can bring significant compliance challenges, which may increase the lead time to market, thus potentially jeopardizing business growth. With customized cloud features like document and reporting compliance, businesses can build a scalable model that allows seamless global compliance with local regulations as the business expands. Tax technology can support management of all types of mandates, enabling a streamlined path for adoption of regulatory reforms while reducing costs and efficiently providing transparency. Cloud enablement for Tax can also help with compliance to address the latest environmental regulations and limit the ecological, social, and economic impact of businesses.
Many organizations find that by including Tax at the beginning of their digital transformation projects, they can unlock benefits that support the overall positioning and business case for the business transformation itself. There are both quantitative and qualitative benefits:
Finance transformation enabled through cloud adoption. A large consumer organization underwent a digital transformation for its Finance process. The company estimated that 30% of ROI would come from tax-related benefits. As part of the effort, Tax worked with the business to implement cloud practices and technology solutions that support a sustainable and agile business across various tax types, such as indirect tax determination, compliance, operational transfer pricing, group tax reporting, and corporate income tax. The result? The transformation enabled the company to generate and use data in a more strategic and value-added way, which helped them address their tax compliance needs with increased efficiency.
Tax is undergoing a paradigm shift as compliance becomes more real time. Cloud adoption can allow enterprises to gain immediate tangible benefits, improving compliance and increasing efficiencies to enhance the tax compliance strategy, readily adapting to future needs. Cloud-enabled business transformation can help streamline compliance and empower Tax to become a strategic advisor for the business. Implementing cloud-enabled ERP solutions can also provide a tax-sensitized, single source of truth to improve controls over transactional data, leveraging harmonized data and automation to simulate scenarios and address tax considerations.
To learn more about transforming the Tax practice with ERP, read the full report, Deloitte and SAP: Transforming Tax Together
Endnotes
1 Deloitte, Tax Transformation Trends: Technology in focus, 2022.
As the chief cloud strategy officer for Deloitte Consulting LLP, David is responsible for building innovative technologies that help clients operate more efficiently while delivering strategies that enable them to disrupt their markets. David is widely respected as a visionary in cloud computing—he was recently named the number one cloud influencer in a report by Apollo Research. For more than 20 years, he has inspired corporations and start-ups to innovate and use resources more productively. As the author of more than 13 books and 5,000 articles, David’s thought leadership has appeared in InfoWorld, Wall Street Journal, Forbes, NPR, Gigaom, and Lynda.com. Prior to joining Deloitte, David served as senior vice president at Cloud Technology Partners, where he grew the practice into a major force in the cloud computing market. Previously, he led Blue Mountain Labs, helping organizations find value in cloud and other emerging technologies. He is a graduate of George Mason University.