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Design considerations for your tax function

Andy Ruggles  PwC Tax Reporting and Strategy Leader  |  Mark Sumlin  Partner, Tax Reporting and Strategy

There has been a lot of discussion on Tax Reform both in the US and globally. However, a common question we receive is this - do I need to change how my global tax function is designed based on the new US laws? Our point of view is that tax reform by itself does not require you to change; however, it is one more disruptor that combined with other factors (such as technology, desire to drive costs lower or increase value, or life events of an organization) that can cause you to re-evaluate how you are organized. Let us explain.

What factors should be considered when leaders select the ideal tax operating model for their organization? On our recent Tax Function of the Future webcast, Tax Organizational Design - Options to Manage Global Tax Team in a Post-reform World, we covered the common tax organizational models we see employed and evolving catalysts for change. Let’s review.

Common tax operating models

  • In-house tax function: heavy corporate functional center, employing regional tax leadership with reliance on controllership for execution at the local country level 
  • Shared services enabled function: corporate functional center utilizing standardization and automation to enable centralized reporting
  • Strategic co-sourced/out-sourced environment: corporate functional center taking transactional and highly routine tax activities outside the four walls of the company through cosourcing/strategic outsourcing 
  • Fully outsourced managed services function: controllership owned function with full reliance on outsourcing for tax operations through a managed services operating model

The catalyst for change 

  • US tax reform and other legislative changes 
  • Faster reporting process requirements 
  • Effective cost management or cost reduction 
  • Technology trends 

Not all tax functions will benefit from the same organizational design and the catalysts for change vary by organization. As such, there are many design elements to consider when designing an effective tax operating model.

The Definition of Success

The first step is to understand what defines success within your tax function and organization. Start by reviewing the following key success factors for tax: 

  • Tax cost (Strategic tax planning) 
  • Tax risk (financial and reputational) 
  • Efficiency and effectiveness 
  • Sustainability of tax positions 

These success factors, among others, can be used to measure performance and set the stage for the specific elements that shape the function’s design.

Contact us

Andy Ruggles

US Data Automation Partner, PwC US

Mark Sumlin

Partner, Tax Reporting and Strategy, PwC US

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