Tax Function of the Future: Legal entity forecasting

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Unprecedented pressure for Tax to redesign its approach

Companies perform strategic forecasting on a management basis, while the Tax function must piece together legal entity forecasts using ad hoc, informal processes. This is a highly frustrating exercise for many organizations. But the environment has become significantly more challenging – senior executives and certain headquarter functions are seeking legal entity forecast data. At the same time, new tax reform rules are complicated and intricate, making accurate legal entity forecast data much more difficult to calculate.

Legal entity forecasting processes are ripe for change – the Tax function should take a fresh look and consider creative approaches that leverage the organization’s current technology footprint.

What are some practical approaches to consider?

  • Many Tax functions experiencing pain points with legal entity forecasting should embrace next-level approaches to achieve greater efficiencies:
  • Most notably, they should leverage existing organizational systems. Are there enterprise class data platforms from which Tax may benefit? Is Finance or Corporate IT investing in specific technology or transformation projects that Tax can leverage? Tax may be able to ‘tax sensitize’ the financial/enterprise data without affecting other priorities, potentially generating a ‘win-win’ for the company.
  • Tax should seek out other functions within the organization that are also needing legal entity forecast data, and consider teaming with them to identify integrated solutions.For example, deal teams may want to value legal entities and underlying assets to make strategic divestiture decisions, while Treasury likely needs the data to support their currency and cash flow management.

The bottom line is that Tax functions do not need to completely recreate the wheel. Instead, they can reap efficiencies for years to come by first reaching across the aisle to other functions.

Click here to read the full blog and details on how to get started with Legal Entity forecasting

Contact us

Andy Ruggles

US Data Automation and Global Alteryx Alliance Leader, PwC US

David Nickson

Principal, Transfer Pricing, PwC US

Andrea Greene

Partner, International Tax Services, PwC US

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