Analysis

Global tax transformation trends survey

New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation.

How tax leaders can implement tax operations trends

New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation. The Tax operations in focus study highlights the first of a three-part tax leader series. Each study will review and reflect the leadership insights of global tax and finance executives at global companies as they share their strategic perspectives on tax operations, talent, and technology.

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Six issues at the top of tax and finance leaders’ agenda

Deloitte’s research revealed six distinctive trends. Please click on each tab below to explore the interactive charts that walk through what we discovered.

Businesses seek more strategic counsel from tax

Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation, which may be taking them into uncharted tax territory. Tax leaders said that their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%), and sustainability (48%) over the next two years. This may mean redrawing the boundaries of what tax professionals focus on and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.

Collaboration with business counterparts has become a core focus for tax as companies navigate the recovery:

Which of the following issues will be the biggest drivers of change for your tax operations and resourcing models over the next one to two years? (rank 1–4)

There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away and tax people become subject-matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.

– Joanne Walker, group tax director, BT Group PLC

The crisis caused a flurry of stress-testing exercises, which triggered a surge in tax forecasting demands. We had to do two years’ worth of forecasting in 12 months. 

– Richard Craine, group tax director, Barclays

Data simplification and lower-cost resourcing are top priorities

Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which appears to be paying dividends: 56% of those that have introduced next-gen ERP systems are now highly effective at supporting the business with scenario modeling insights. Only 35% of those with moderate-to-low use of next-gen ERP systems said the same.

Simplifying data management and moving to lower-cost resourcing models are key considerations for the future tax model:

To what extent are you prioritizing these measures over the next one to two years to help your tax team deliver more strategically valuable, data-driven insight to the wider business? (Percentage citing 8–10 on 0–10 scale)

We automated the source P&L process for transfer pricing, which took a huge burden off of the divisions. Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform, which will help us make take the next step with robotics.

– David Furgason, vice president of tax, Stryker

2020 brought productivity improvements:

Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19–driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long-term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skills, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.

The pressures of the pandemic are strengthening the case to go faster and further on remote working, tax compliance services, and cloud, particularly among CFOs and at the largest organizations

To what extent have the events of 2020 created opportunities for your tax function in the following areas over the next one to two years? (Percentage citing 8–10 on 0–10 scale):

We know that making tax digital is on the horizon for corporation tax, for instance, so we need to ensure we’re looking ahead at those trends within the design process so that we can future proof ourselves as much as possible.

 Joanne Walker, group tax director, BT Group plc

Skill needs are shifting:

Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned; data skills (45%) and technology process experience (43%) are “must-have” skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success may be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.

Tax leaders are prioritizing data specialists and people that can orchestrate digital transformation:

What skills will your tax department prioritize over the next one to two years to ensure it is positioned to meet the changing needs of the business?

We formed a VAT technology and governance group that has the right knowledge about how to change the system to ensure it generates the right reports. Involving them early was key, as we took a greenfield approach so we could think about what the optimal processes would look like and how more intelligent systems could make an impact. 

 Matthias Schubert, global head of Tax, Infineon Technologies

Tipping point for resourcing models

Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology. Deloitte’s prior historical tax and finance leader survey data shows a dramatic shift of compliance work out of group tax teams between 2019 and 2021, as resourcing models hit a tipping point. This trend may continue, but tax leaders may wish to plan with foresight to ensure they retain the right expertise to meet the demands of the changing policy landscape.

Respondents saying compliance and reporting activities are primarily resourced within the group tax department:

Resourcing shifts in 2016 vs. 2019 vs. 2021

Respondent data indicates that work is being moved to a combination of shared services centers, finance departments, and outsourcing providers.

How compliance and reporting activities are being primarily resourced:

In the examples below, we highlight the migration of transfer pricing documentation and indirect tax returns that has occurred over the past two years, but a similar trend can also be observed in relation to global tax provision, corporate income tax returns, and statutory accounts.

Digital tax administration is moving faster than expected

In addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.

The race is on to get ahead of digital tax administration

The OECD Forum on Tax Administration's recent discussion paper outlines a new model for digital tax administration. How would you rate the impact this type of development is likely to have for your tax operations and resources over the next five years?

The world is moving towards granular real-time tax and finance data—you can see how quickly territories like Russia and India have moved with VAT. And that presents a real issue, because right now, we’ve got it every month and aggregated.

– Global head of Tax, global bank

It’s really stepped up in the last couple of years. Tax authorities don’t just want a faster turnaround for compliance, but access into a company’s systems.

– Anna Elphick, VP Tax, Unilever

Get in touch

We are here to help. Whether you'd like to arrange a meeting to discuss your organization's needs or you'd like us to respond to your RFP, feel free to contact us.

Emily VanVleet
Tax Operate Leader
Partner, Deloitte Tax LLP
evanvleet@deloitte.com

Andy Gwyther
Deloitte Global Operate Leader
Tax & Legal
Partner, Deloitte UK
agwyther@deloitte.com.uk

 

Daniel Barlow
Managing Partner
Regional Markets
Partner, Deloitte UK
dabarlow@deloitte.co.uk

Christopher Roberge
Tax Operate Leader
Deloitte Asia Pacific
Partner, Deloitte Hong Kong
chrisroberge@deloitte.com.hk

 

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