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The revenue agency of the future

by Gustav Jeppesen, Mark Price, Kathryn Karlman, Jesper Kamstrup-Holm, Ben Powell, Ruairi Allen, Allan Mills
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3 minute read 13 January 2020

The revenue agency of the future Seven keys to digital transformation

3 minute read 13 January 2020
  • Gustav Jeppesen United States
  • Mark Price United States
  • Kathryn Karlman United States
  • Jesper Kamstrup-Holm Denmark
  • Ben Powell United Kingdom
  • Ruairi Allen Ireland
  • Allan Mills Australia
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    • Jesper Kamstrup-Holm Denmark
    • Ben Powell United Kingdom
    • Ruairi Allen Ireland
    • Allan Mills Australia
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  • 1. Get digital to the core
  • 2. Unlock the power of data
  • 3. Reimagine the workforce
  • 4. Elevate the tax experience
  • 5. Tax new stuff fast
  • 6. Embrace the end-to-end tax community
  • 7. Balance competing priorities

Revenue agencies increasingly recognize that yesterday’s taxation models can’t keep up with the technology revolution. These seven keys to success can help tax agencies prepare for the future.

Knowledge economy. Sharing economy. Gig economy. Cryptocurrency exchanges. Virtual transactions.

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These aren’t just buzzwords—they are modern-day realities that the world’s revenue and tax agencies face. In a world of accelerating digital and economic disruption, many revenue agencies recognize that yesterday’s taxation models—and the systems that support them—can no longer keep pace with the technology revolution reshaping our world.

While many revenue agency leaders understand the importance of taking digital transformation seriously, few have cracked the code to unlock a long-term, “future-proof” model for mission success. Random acts of digital adaptation won’t help. Revenue agencies must shift from doing digital to being digital.

So what can revenue agencies do to successfully keep pace with rapid technological change and evolving citizen expectations? Seven keys can guide their journey to digital transformation: three internal shifts, three external shifts, and one strategic “mindset” shift.

1. Get digital to the core

Revenue agencies can start by making internal fixes, including transforming the core functions of tax administration.

Many tax agencies have taken a piecemeal approach to digital-based operations, building stand-alone digital products atop legacy foundations, which has challenges related to cost, ease of use, and incompatibility with emerging technologies.1 Building a truly digital core will require a multipronged approach that can include automating tax submission review workflows and adopting modular, flexible approaches to systems architecture to respond to changing policy mandates.

2. Unlock the power of data

Digital economic transactions—salaries, sales, natural language, and much more—give what revenue leaders want: data. The bad part? They generate plenty of it. While it is imperative that revenue agencies make sense of these vast amounts of data, many of them are unequipped to make the best use of it—especially when data is trapped in silos and legacy systems.

A foundation of digital transformation is getting the data right. Revenue agency leaders can then unlock the power of new types of data while protecting the privacy of constituents and serving the public good.

3. Reimagine the workforce

People are an organization’s biggest strength. However, sourcing the right talent with the ability to work with complex data, manage digital platforms, and lead effective teams is becoming increasingly difficult.

Revenue agencies need to reconsider how competitive their value proposition is to prospective and current employees and reimagine every aspect of talent management, including recruitment, hiring, skills development, advancement, and career transitions. They may also need to tap into human resources from outside the traditional employee base, including gig workers, crowdsourced solutions, creative partnerships with other players in the tax ecosystem, and digital labor, which can actually extend the capabilities of human workers.

4. Elevate the tax experience

Taxation may never become citizens’ favorite interaction with government. The easier that experience is made for them—whether through reduction in manual calculations, better access to information, or user-friendly design interfaces—the greater their tax compliance.

The clearest path toward elevating the tax experience is by meeting citizens where they are: on their mobile phones, in their email inboxes, or via smart home devices. However, implementing these changes will require serious digital capabilities—the kind that can only be built through deliberate investment.

5. Tax new stuff fast

Revenue agencies are being asked to hit a fast-moving target, guided by laws and regulations that were not designed with this digital reality in mind. What is the right way to tax a never-before-seen business model?

One way could be to approach taxation with the same focus on dynamic agility that drives software development and systems engineering, addressing emerging patterns of risk by implementing systemic, responsive cultures and operating models. Revenue agencies must enhance their ability to understand, track, and “tax new stuff” both quickly and correctly. This stuff ranges from jewelry sales via Instagram, to apartment rentals via Airbnb, to various forms of short-term “gig work” delivered via virtual global platforms.

6. Embrace the end-to-end tax community

Not only do revenue authorities deal with citizens, government agencies, private corporations, and other members of civil society, they also coordinate with revenue agencies of different jurisdictions, locally, regionally, and globally. Therefore, they need to understand how to best be a part of this ecosystem.

Steps that they can take in this direction include mapping the economic processes driven by members of the end-to-end tax community and partnering with private industry, government agencies, and international organizations.

7. Balance competing priorities

Revenue leaders often find themselves walking a tightrope of paradoxes. They are asked to increase data accessibility while ensuring data security, drive innovation while minimizing risk, and become fully digital while retaining a human touch.

Revenue agencies can respond to these paradoxes by shifting from an “either/or” mindset to a “yes, and” mindset. One way to do this is by viewing technology as an enabler instead of a blocker.

To know more about how revenue leaders can unlock successful digital transformation, read the full report Building the digital revenue agency of the future: Seven keys to transformation. 

Acknowledgments

The authors would like to thank Bruce Chew and John O’Leary of the Deloitte Center for Government Insights for providing their valuable insights and expertise throughout the development of this article.

Cover image by: Hylton Warburton

Endnotes
    1. Joe Mariani et al., Cloud as innovation driver: The foundation for employing emerging technologies in government, Deloitte Insights, June 24, 2019. View in article

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Topics in this article

Revenue Growth , Government , Public Sector , Technology , Digital Transformation

​Deloitte Center for Government Insights

Our Center for Government Insights produces groundbreaking research to help government solve its most complex problems. Through forums and immersive workshops, we engage with public officials on a journey of positive transformation, crystallizing insights to help them understand trends, overcome constraints, and expand the limits of what is possible.

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  • Ronnie Nielsen
  • Manager, NSE Tax Thought Leader
  • DK‑København C
  • rnielsen@deloitte.dk
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Gustav Jeppesen

Gustav Jeppesen

Gustav Jeppesen is chair of the board of Deloitte Denmark and member of the Nordic and North South Europe (NSE) boards. Furthermore, he is the chief strategy officer/chief operating officer in consulting, Denmark, as well as NSE leader for civil government. Jeppesen has headed major transformation projects in the public sector with key competences within optimization, including cost reduction and cost assessment.

  • gjeppesen@deloitte.dk
Mark Price

Mark Price

Principal | Deloitte Consulting LLP

Mark is a principal at Deloitte Consulting and the lead client service principal (LCSP) for our work with the Internal Revenue Service (IRS). He is a leader in the US Government & Public Services (GPS) practice and the Global Consulting leader of our Civil Government Sector. Mark has lived and worked in North America, Asia-Pacific and Europe and has more than 30 years’ experience leading strategy, operations and technology transformation programs for a wide range of government, healthcare, and higher education clients. Mark has worked across many government domains, including tax and revenue, healthcare, human services, transportation, motor vehicles, energy, resources, finance and administration, technology and digital government. Mark has also led major transformation projects for several healthcare clients around the world and some of the leading higher education institutions in the US. Prior to joining Deloitte, Mark served as Head of Strategy and Business Planning for the University Hospital of Wales, one of the largest academic medical centers in the UK, where he worked directly with the CEO. Previously, Mark served as consultant with a boutique strategy firm in the UK where he conducted international strategy engagements. Mark contributes significantly to Deloitte research and publications and has been called upon to speak on the topic of transformation in government, healthcare and higher education across the US and overseas. Mark holds a degree in Business Economics from the University of Wales, UK.

  • maprice@deloitte.com
  • +1 617 585 5984
Kathryn Karlman

Kathryn Karlman

Kathryn Karlman is a managing director in the U.S. Consulting practice with deep expertise in tax accounting and tax preparation and compliance. In her consulting role, Karlman has been advising the Internal Revenue Service (IRS) on the strategy and implementation of transformational efforts, including implementing the largest tax reform in recent U.S. history.  Prior to joining Deloitte Consulting in 2017, Karlman spent over 25 years in public accounting,  serving as a tax advisor to a range of public and privately held companies.

  • kkarlman@deloitte.com
Jesper Kamstrup-Holm

Jesper Kamstrup-Holm

Partner, GPS Industry Leader

Jesper Kamstrup-Holm is a Denmark-based partner and has spent 13 years at Deloitte advising IT managers and CIOs. During this time, Kamstrup-Holm has specialized in working with large public institutions on everything from digital transformation and IT sourcing strategies to IT effectiveness analysis and business cases. For over five years Jesper has been advising the Danish Ministry of Taxation in tackling challenges, such as data and socioeconomic consequences of Denmark’s new customs authority and cloud migration to Amazon Web Services for a new Property Tax Valuation System. Additionally, Kamstrup-Holm has led work to develop a digital transformation strategy for the Danish Tax Authority (DTA).

  • jesholm@deloitte.dk
  • +45 30 16 21 24
Ben Powell

Ben Powell

Partner

Ben is the leader of Deloitte’s UK Central Government business as well as leading on Tax Administration across North South Europe. He and his teams support public bodies on a wide range of issues including tax administration, customs and trade as well as housing, education and local infrastructure. His clients include a wide range of central government departments, executive agencies, and other public bodies. Ben is a member of the Chartered Institute of Taxation and he speaks regularly at public sector events on many of the above subjects.

  • bpowell@deloitte.co.uk
  • +44 118 322 2815
Ruairi Allen

Ruairi Allen

Partner - Consulting

Ruairí Allen is the Partner Lead for Cloud Engineering in our Consulting practice in Ireland. He has over fifteen years experience and has a lead role in the Irish Systems Integration solution area. Ruairí has deep experience as a Technology Advisor and Delivery Manager in both the Public Sector and Financial Services. He specialises in enterprise technology strategy and change programs. Ruairí current focus is in the Public Sector and he has worked with national and local government in Ireland and has advised a broad range of public sector organisations in technology change and transformation.

  • ruallen@deloitte.ie
  • +353 1 417 2593
Allan Mills

Allan Mills

Partner, Consulting

Allan is a Consulting Partner, a member of Deloitte’s national public sector industry executive and the National Civil Sector Lead Partner. Allan has more than 10 years’ experience working with government to design programs, funding and governance to achieve the desired outcomes. Allan’s passion is about making an impact to the world in which we live. He is focused on working with Government and their service delivery partners to improve outcomes for people they support. He does this by helping organisations improve their service delivery model, analysing and understanding the drivers for costs and making sure the right measurement approaches are in place. The Civil sector includes the central agencies, regulators, revenue collectors and administrative functions of Government with projects ranging from the consolidation of state finances, automating debt collection processes, developing state programs for innovation and implementing new corporate and enabling operating models. Within the sector, Allan and his team are focussed on four key initiatives: Smart Cities, Regulator of Tomorrow, Digital Government and Effective Government. Whilst broad in nature these initiatives bring together insights gathered from around the world, tailored to the Australian market.

  • allmills@deloitte.com.au
  • +61 2 9322 7397

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