Today tax compliance can be quite challenging, what's your perspective on the compliance challenges and drivers for change at Thermo Fisher?
I guess if I look back recently there have been two main drivers worth highlighting. First, the challenge of regulatory changes – for example around Making Tax Digital (MTD) in the UK, back in 2019. We knew we had to seek out a compliance solution that had an application programming interface (API). In some countries we already had some experience with tax return preparation software, but most returns were still prepared the old-fashioned way – via ERP tax reports, adjusted in Excel and entered into a government portal – a manual process. We knew that for MTD we really needed to train people to start thinking about linking data flows with clear audit trails that upload into an API and of course they had to learn how to work with new software. It was quite a significant effort not least because Thermo Fisher has a substantial footprint in the UK with many entities to manage.
Second, a significant change has been our move to an internal shared service centre (SSC) a centre of excellence created about two years ago. Much of our European finance groups have moved into the SSC which has two main departments. One, based in Eastern Europe, handles the financial operations taking care of the core AP and AR process for a number of divisions. The other, based in the UK, handles the compliance affairs for the group, including statutory compliance, corporate tax compliance and also indirect tax compliance, VAT returns, sales lists and Intrastat. Getting the SSC delivered was a tremendous task but looking back it was also a tremendous achievement.
Why did you choose Vertex to help solve the compliance challenges?
As a corporate function you really have to drive scalability, that's really one of the main deliverables that you have, so any platform selected had to meet that requirement. The solution had to handle any filing in Europe and be easily connected to ERP systems with the flexibility to upload data and where possible support e-filing. It was also important to have a hosted service because with a hosted service we don't have to invest in updates and do technical maintenance.
I think you also need to engage with a service provider with a well-established name and with the ability to deliver robust support – for us there's a tremendous amount of tax returns that need to be delivered in certain periods so if there are hiccups Vertex is only a phone call away and can bring the necessary resources to resolve any issues.
We talked to multiple vendors and assessed all functional and technical specs. Our US colleagues had been working with Vertex for a long time and at the end of the day we came to the conclusion that Vertex has the best price to quality ratio for us in Europe too.
How did you get buy-in from your stakeholders internally? What advice do you have?
Well, within Thermo Fisher, being a science and technology company, there is already a good sense for all the benefits that digitisation offers. The company also recognised the trend that tax authorities are catching up fast when it comes to digital reporting requirements. The business understands that the trends are being turned into legislation and you really need to make sure that systems are in place to support these developments.
Also, and at least equally important, the internal stakeholders to convince are the end users. My advice is that you have to keep communicating to all stakeholders throughout the selection and implementation process. I believe it really helps if your vendor actively reaches out and involves you in earlier adopter programmes and engages in discussion because that really highlights their efforts in understanding what works (and not) for their customers. This approach builds trust.
I think getting stakeholder buy-in for digital transformation will become easier, while the Coronavirus crisis has been a big driver for accelerating of digitisation, I also feel that everybody is still learning about what works in practice. Use of e-invoicing is really being accelerated at the moment in many countries and just demonstrates the need for an increased digitisation effort. If you don't invest in this area, it will be more and more challenging to do business.
Overall, the price quality ratio that Vertex offers wasn't a big discussion with the business. At the end of the day our local reporting entities still get a charge for the number of returns that have been prepared for them via the SSC and by looking at the overall picture it was not difficult to get their buy-in for the business case.
Daniel Jansen, Senior Manager Indirect Tax | Thermo Fisher Scientific