Tax function effectiveness
The vision for tomorrow's tax function

A tax management framework

PwC's publication, Tax function effectiveness, is the definitive guide to the "why," the "what" and the "how" of managing an effective tax function. Based on a tax management framework, the book is filled with the practical tools, best practice examples and insights to help organisations manage their tax function in a dynamic, global environment. With tax authorities increasingly focused on the "tax gap" and corporate agendas focused more on compliance and regulatory reporting, the book is designed to help companies optimise tax outcomes, manage risk, improve transparency and contribute value

Why: The book begins by looking at why tax needs managing, putting some context around the key external business and regulatory drivers affecting tax management.

What: The publication goes on to deal with what needs to be managed within an organisation in relation to tax, expanding on the concept of the enablers and deliverables and what we mean by tax risk.

How: Finally, the book sets out best practice tools, methodologies and approaches for creating a strategic tax plan, developing the enablers and executing the deliverables.

Why tax needs managing

Tax function effectiveness addresses the unique challenges of the tax function. The tax function's objectives should themselves be driven by what is happening in the business and the wider business and regulatory environment. While the objectives of different tax functions will vary in the detail, we believe that the effectiveness of the tax function is fundamentally based on its ability to achieve three core objectives:

  • Create, protect and optimise value in the context of the organisation's business objectives;
  • Manage a wide range of tax related risks from carrying on business; and
  • Ensure compliance with tax laws and reporting requirements.

Tax planning and advisory activities should be focused on optimising tax outcomes and managing risk, both in respect of strategic transactions and day-to-day operations. Compliance and reporting activities tend to be process driven activities that are focused on both risk management and external communication of tax outcomes. It is critical for the effectiveness of the tax function that an appropriate balance is reached between the achievements of the three core objectives set out above.

The Framework

A tax management framework
This book contains an established tax management framework for how a tax function should operate. The starting point is a properly documented tax strategic plan.

We believe there are eight "enablers" which underpin the efficient implementation of the strategy (see inner circle of diagram to the right). The results of the plan, together with the "enablers", are the four "deliverables" (see outer circle of the diagram). These "deliverables" are the outputs required for the successful management of the tax affairs of the business.

To achieve the right balance, the tax function needs to understand and focus on the enablers as well as the deliverables.