How Tax Teams can help fortify their businesses during periods of significant disruption

Yes, chaos.

It’s not too strong a word to describe the incredible volatility and global economic shocks of the past few years. As businesses and their tax groups have contended with everything from trade wars and military wars, lockdowns, supply chain disruptions, inflationary surges and more. It’s by no means a stretch to state that tax leaders can play a key role in helping their organizations navigate safely through whatever turbulence lies ahead.

A recent Tax Executive article, Agents of Chaos: How Tax Leaders Are Adapting to Global Disruptions, explains why tax teams are key to countering external disruptors and emerging complexities. The authors are Michael Bernard, Vertex’s Vice President of Tax Content and CTO of Transaction Tax, and myself.

In our era of overlapping global crises, businesses need to get better at thinking on their feet, and tax teams can help them achieve that. Mike and I point out: “Many responses to the volatility of these pivots—such as pursuing mergers, consolidations, or divestitures or redesigning capital arrangements—now have more multifaceted tax compliance and cross-border audit implications that should be swiftly examined and then addressed with minimal friction.”

Here are three ways tax groups can fortify businesses against the agents of chaos:
1.   Transfer pricing. Inflation can distort transfer pricing models, especially when prices fluctuate more considerably between costs and profit centers and more frequently in some regions than in others. In low-inflation periods, tax departments might adjust transfer pricing models quarterly or even twice yearly. But in today’s environments, you may need to shift to every other month or even more frequently. This is essential because transactional analysis and indirect taxation, has played a significant role in transfer pricing compliance.
2.   Automation. Many tax organizations are implementing innovative tax engines, particularly to support sales tax and VAT, and automating data flows for tax reporting. This will help them meet the increasing demand for tax planning and analysis, as well as supporting tax leaders’ involvement in strategic planning in today’s highly dynamic business environments. It can also help tax professionals spend less time on routine tasks and more time expanding their strategic contribution.
3.   Talent. The tight labor market will likely continue for some time, and competition for tax professionals with technology expertise will remain fierce. The work-from-home shift has given businesses that provide that option a hiring advantage. Tax leaders should continue to keep an eye on the challenges and look for new, more innovative ways to attract and retain talent.

We delve into these chaos-cancelling strategies, and others, in more detail in the article

Please remember that the Vertex blog provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information. The views and opinions expressed in the Vertex blog are those of the authors and do not necessarily reflect the official policy, position, or opinion of Vertex Inc.

George L. Salis

Chief Economist and Senior Tax Policy Director

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George L. Salis is Chief Economist and Senior Tax Policy Director. He is an economist, lawyer, and tax professional with 29+ years’ experience in international taxation and trade compliance, tax planning and controversy, fiscal regulation, and tax economics consulting. He is responsible for analysis of economic, fiscal, legal, trade, and development issues in countries, as well as tracking and analyzing the rapid change in tax policies and regulations, and inter-governmental organizations, and tax administrations around the world.

George is the recipient of the Advanced Certificate in EU Law from the Academy of European Law, European University Institute in Florence, and the Executive Certificate in Economic Development from the Harvard Kennedy School of Government.

George received his BSc in economics and political science, an LLB (Honours), an MA in legal and ethical studies, and an LLM (Honours) in international tax law. He also holds the PhD in international law and economic policy, and the SJD in Taxation from The University of Florida, Levin College of Law. George is a Certified Business Economist (CBE- NABE).