Tax transforms, business wins: An industry perspective

Enhancing the tax function makes an impact at leading life sciences organizations

The speed of change in global tax regulation is faster than ever. For life sciences companies, heightened M&A activity and regulatory changes requiring global coordination challenge Tax Executives to keep up. What can be done to gain competitive advantage and transform how Tax does business?

The call for tax department transformation

In our work with clients across industries and around the world, we see firsthand that CFOs and other stakeholders are asking tax executives to raise their game and proactively partner with the broader business. Increasingly, these leaders are looking for transformation of the tax function to add more value to the organization.

Indeed, pressure is mounting for tax departments in all industries to expand in scope and impact as their organizations grapple with increasing competition, globalization, and technologies in the midst of stricter and more globally aligned
tax regulations. In addition to the traditional responsibilities of tax planning, reporting, and management, tax executives face urgent expectations to mitigate risk and lead decision making across the organization.

Responding to the emerging demands involves a shift in how—not necessarily what—work is performed. It requires enhancement of the tax department’s responsibilities to be in line with overarching business strategies. Transformation can elevate the capabilities and performance in ways that incremental change cannot. It can increase tax’s value to the organization by:

  • Enhancing operational efficiency—Freeing up personnel to perform value-added tax planning activities with increased compliance and reporting efficiency driven by technology and process standardization.
  • Improving risk management—Increasing transparency and formalizing risk procedures that can help effectively address financial statement and audit risk.
  • Increasing strategic and business alignment—Becoming a value-added tax function that is aligned with the organization’s strategies and partners closely with business units.

Deloitte has worked with a number of life sciences organizations to gain perspective, plan for change, and start their tax department transformation journeys. Let’s take a closer look at the issues the tax departments of these companies face, and how they are heeding the call to transform.

Tax department transformation in life sciences: Key issues and Deloitte Transformation Enablers

In our tax work with leading life sciences companies, our clients note some key issues that are keeping them up at night:

  • Increased M&A activity
  • Organizational mandates for tax functions to do more with less
  • Regulatory changes, including Base Erosion and Profit Shifting (BEPS), that call for increased global coordination and focus
  • Major “life events” such as an unexpected drop in a company’s share price due to an external incident
  • Need to align with other corporate functions to deliver internal services more efficiently

In response to these many drivers of change, life sciences tax departments are looking for solutions that address their challenges in four key areas, which we call Deloitte Transformation Enablers:

  • People: Deploy people to more value-added activities.
  • Process, technology, and data: Make better use of their data by leveraging new technologies.
  • Operating model: Simplify processes and policies, streamline their operating models.
  • Risk and policy: Manage risk and policy changes globally.

Using this framework, Deloitte helps clients critically analyze the need for transformation and create the necessary changes. Here are just two examples of how Deloitte is delivering value to life sciences clients by tackling their complex issues and assisting them in the deployment of solutions:

Leading the future of the tax department

Overall, we see an increase in the number of life sciences companies exploring tax department transformation—they are looking for more usable data, mitigated risk, and to redeploy people to focus on value-added activities.

Deloitte’s Tax Department Transformation practitioners help clients start with a solid plan, analyzing tax department performance, providing perspectives for the journey and an actionable roadmap for change.

For more information or to contact Deloitte, visit the tax transformation home page. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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