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With a new presidential administration comes a rapidly evolving regulatory environment and uncertainty around what’s on the road ahead, including questions around the fate of President Biden’s broad proposals. Increases in tax rates for corporations and high-income individuals, changes in international tax laws and other revenue-raising measures are all but certain in the foreseeable future. Policies — including increased regulations around tax and other areas — will continue to be in flux, at least for the short term, as our leaders work to rebuild an economy hit hard by the global pandemic and resultant financial setbacks. According to PwC’s March US Pulse Survey of C-suite executives, 83% of all US business leaders are expecting to increase revenues this year. That’s a significant jump over last fall when only a quarter of finance leaders were expecting growth.
For many tax departments, an increasing tax rate is the focus: Two-thirds of tax leaders surveyed in the March pulse survey from Fortune 1000 and private companies are prioritizing planning in anticipation of potential increases in tax rates this year. Seventy-five percent of the tax leaders who responded to our survey are already modeling potential impacts of a tax rate change, and 55% are stepping up tax planning for value creation and risk management.
So the question is, how can tax leaders manage these regulatory changes while also supporting their organization’s growth goals?
One thing many tax leaders who responded to the survey are focused on to help them prepare, is enhancing the tax department operating model. Resources are being strained as organizations struggle to keep up with policy changes and are forced to spend valuable time and energy educating their workforces and updating technology and processes to adhere to new rules. Invariably the changing policy and regulatory requirements increase the tax department’s workload with increased compliance burdens and ever-changing modeling, forcing enhancements to their processes and technology solutions that companies rely on for efficiency.
The good news: Policy revisions don’t have to distract your company from its primary goals. There are a variety of operational approaches that could be the right fit for your organization, whether that means accelerating internal staffing, working with a consultant or reallocating a portion of compliance duties. Each approach has its pros and cons, but we can help you determine what works best for you as you prioritize for the evolving environment.
One approach to keeping up with regulations is teaming with an organization through managed services. Tax managed services can be particularly beneficial when it comes to helping companies increase agility as tax regulations and policies change in order to manage risk and maximize efficiencies. This model lets tax functions leverage managed services for a significant portion of operations that require highly-skilled tax professionals, so they can prioritize supporting the strategic aspects of their organization’s growth goals, while making the most of their budgets.
Some organizations may choose to appoint or bring on internal staff who require a specialized skill set to handle regulations, but this can be costly and time-consuming. You may either need to create specialized training for the existing staff or be left with excess staff when these seasonal needs cease to exist. Some organizations may turn to their preferred consultants to provide this level of expertise. This too can get expensive and time-consuming as you pay a premium price to get the consultants up to speed with your business priorities while fighting for their time as they serve many different clients.
Like consultants, the experts at tax managed services providers are subject matter specialists who eat, sleep and breathe regulation. However, since the delivery model is such that they are essentially acting as your tax department, these tax managed services providers are already ingrained and understand your business priorities, providing you greater agility. Additionally, managed services providers bring tax technologies and processes that are consistently updated to accommodate regulatory changes which can lead to reduced risk and cost savings for you.
Those who use tax managed services are able to quickly and cost effectively tackle the changing regulatory landscape. The model allows organizations to scale their workforce to fit their needs, giving them access to the right level of expertise but only paying for the services they need. And since these tax managed services providers bring the best in process and technology, they’ll help drive greater efficiency, allowing organizations to make better use of their budgets.
There’s no such thing as a one-size-fits-all solution to tackling the regulatory environment. But a managed services delivery model could help organizations stay focused on growth goals. Remember, there’s no need to go it alone.