Tax Modernization: 3 Areas that Require Attention
What do tax functions need to thrive in a world of increasingly stringent regulatory environments and escalating digital demands? Vertex experts Michael Bernard and Nancy Manzano from our chief tax office offer a high-level view of the way forward in their World Finance article.
“Changes in tax policy and compliance requirements are giving rise to new risks, while also ratcheting up pressure on tax functions to collect, organize and report far more compliance data, all in real time,” they note. To respond successfully, businesses will need to address the following three areas (among others):
- A shared vision. Tax policy challenges are attracting more attention from executive leadership and boards of directors. Tax leaders should work with these stakeholders to build a shared vision of what a transformed tax function looks like. One important goal should be the creation of a tax technology plan covering three or more years. The plan should include a detailed list of the department’s IT needs and a budget for meeting these needs. “This type of ‘tax technology playbook’ can help tax leaders secure adequate technology funding from their colleagues in corporate finance and accounting,” the article points out.
- Strategic talent management. Businesses will need to recruit, retain and develop a far greater number of tech-savvy professionals than they have in the past. While these “tax technologists” won’t necessarily need to be fluent in programming languages, companies will be looking for an ability to write simple queries and to handle basic coding, as well as experience with ERP systems and tax technologies. And these employees, for their part, will prefer companies that offer the chance to work with advanced tax platforms rather than legacy applications.
- Close collaborations among tax and key internal groups. The article focuses on three functions: internal audit (IA), IT and finance. IA can help tax leaders build the business case for investments, especially when the technologies can reduce the risk of a material weakness or deficiency. IT can advise on technology selection, implementation, maintenance and security. Finance can help tax departments ensure seamless access to data in billing applications, ERP systems and accounting technologies.
Now is the time for a concerted effort on tax modernization. Michael and Nancy conclude that today’s “growing expectations and expanding workloads make a shared vision for a future tax function even more critical to the success of businesses around the world.”
Please remember that the Tax Matters 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.
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