The new KPI for tax: Doing more with less

The impact of the COVID-19 health crisis on business operations and the workforce highlights the critical need for preparedness, cost effectiveness, and agility moving forward. The Tax function is no exception. Many are working to increase operational resilience and address virtual work challenges that strain day-to-day activities.

In addition, the C-suite wants alignment with larger strategic priorities, which for many businesses means cost reduction and the message to Tax continues to be ‘do more with less’. Tax should look to broader business trends like digital strategy and transformation to meet this challenge. Agility is no longer ‘nice to have’ - it has become a critical business imperative.

73%

of CFOs say crisis-driven transitions to remote work will make their company better in the long run

72%

of CFOs believe their companies will be more agile going forward

56%

of CFOs believe technology investments will make their company better in the long run




Explore the themes

In this series, we explore how leading Tax functions are enhancing collaboration, considering new operating models, and leveraging data automation to work differently - doing more with less.

Collaboration

Tax operational design

Data automation

Theme 1: Collaboration

The interruption of routine processes highlighted inefficiencies within the Tax ecosystem. Many Tax functions struggled to transition when remote work began, causing delays and disjointed execution. Insufficient documentation of Tax processes – including workflow tasks, roles, responsibilities, and handoffs – further exacerbated the situation. In turn, Tax resources spent a significant amount of  time executing on manual tasks and process workarounds.

Tax functions should embed the detailed process and workflow steps into a collaboration technology– a powerful tool that can facilitate transparency between team members, dramatically impacting a Tax function’s efficiency in a remote work environment. Solutions can be built to optimize.

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What value can you realize

Workflow management
Workflow management:

Tax teams can populate workflow details by defining processes, tasks, and assigning roles (preparer, reviewer, approver, etc.). These tools can then track status, highlight roadblocks, integrate with document management, and provide an audit trail.

Document management
Document management:

Teams can quickly locate documents based on metadata, manage multiple versions, access documents in an online environment, and maintain a trail of edit history.

Data collection
Data collection:

Tax can design data collection forms to collect critical information, apply structure and governance to how data is entered and collected, and integrate with workflow management goals.

Reporting, analysis, and visualization
Reporting, analysis, and visualization:

Teams can gain real-time insight into workflow status, visualize data collection items in an impactful way, and show executive-level insights with an ability to drill down deeper into the data.

Controls and governance
Controls and governance:

Tax can build in automated controls into these tools to mitigate financial risk.

What are the key performance indicators (KPIs)

Managing Tax risk

Effectively managing Tax and related enterprise risk is an important responsibility of the function. Consider financial and reputational risk while adopting solutions, designing and executing controls, and developing Tax strategies.

Gaining process efficiency and effectiveness

Adopting collaboration tools can drive process efficiency and effectiveness – i.e., embed detailed process and workflow steps, manage document retention and review, generate management insights, and automate controls and governance.

Establishing sustainability and increasing agility

Increasing complexity is putting a strain on Tax functions especially in a remote environment. The need to establish sustainable, agile technology-driven processes is critical to drive long-term success and quickly adapt to business and tax law changes.

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What’s next for the Tax function? Integrate tactical solutions for long-term vision for the future

PwC's Margie Dhunjishah (Partner, US Tax Reporting & Strategy leader),  Kasey Dunn (PwC US Industry Tax Practice Leader) and Jonathan Howe (PwC UK Tax Operations and Strategy Leader) discuss how tax functions should embed the detailed process and workflow steps into collaboration technologies – powerful tools that can facilitate transparency between  team members, dramatically impacting a Tax function’s efficiency in a remote work environment.

Theme 2: Tax operational design

Tax functions have been balancing competing priorities, including adapting to a remote work environment. The increase in demands and changing environment have put a strain on Tax resources while highlighting gaps in processes, technology, and (in some cases) required skill sets. There is a growing sentiment to think broadly and examine whether the Tax function’s historic ways of operating can meet the organization’s goals going forward.

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Re-evaluate your tax operating model

Examine your state to determine whether fundamental operating model changes are needed to drive sustainability and agility in the long-run – no one size will fit all. Many Tax functions have historically utilized an in-house function with integration of other types of models, such as a shared service function and co-sourcing with other teams for certain areas such as overseas operations. Although this model has served many organizations well in the past, it may no longer yield the desired functionality, efficiency and cost level. 

The following models should be examined to help address the increasing demands and challenges. Each model has its own design elements relating to data, process, technology and people to consider.

  • In-house Tax Function: Corporate Tax headquarters function, regional or business unit leadership, and local controllership execution
  • Shared service enabled function: Centralized Tax function leveraging enterprise shared service centers or centers of excellence
  • Strategic co-sourced or outsourced environment: Centralized Tax function engaging third parties for co-sourcing or outsourcing arrangements
  • Fully outsourced managed services function: Third party provider operates as the in-house Tax function in all major respects, with exception of management decisions

Does the Tax function have the right ‘mix’ of capabilities to deliver? Is the Tax function’s ability to execute all tax processes (including state and local taxes and indirect taxes) and meet deadlines? Are there resource or bandwidth concerns that may interfere with the Tax agenda? Is Tax a strong partner to the business by providing the real-time insights needed for strategic decision-making? Are technology platforms robust enough to yield desired results?

Tax executives should consider what end goals define success for their specific Tax function in light of the current environment. Broadly speaking, critical operational factors include cost, risk (financial and reputational), effectiveness, and sustainability. Tax should be aligned with the broader business as they evaluate options. 

Utilize ‘quick wins’ to drive success

In addition to more fundamental changes, Tax functions should consider shorter-term solutions for specific processes and tasks that can help fill the gaps and address immediate problem areas. The following “quick wins” leverage technology know-how, supplemental resources, and creative thinking:

Expand modeling capabilities to better facilitate planning and elevate decision-making, particularly for technical and interdependent tax calculations such as GILTI and BEAT.

‘Lean in’ on digital labor – such as small automation and visualization tools – to automate component parts of a process, generate valuable insights, identify issues and risks, support decision-making and expand bandwidth. 

Digitally upskill Tax resources to enhance their productivity and value-add, while also helping the Tax function scale for future growth and increase agility going forward.

Propel execution with enhanced project management that can centralize coordination and communication efforts, and better manage resources, tasks, stakeholder expectations, and risk. Tax can co-develop solutions to remain in sync across the enterprise (e.g., HR, IT, finance).

Engage loan staff for extra resources or tax technical expertise to address particular problem areas

What are the key performance indicators (KPIs)

Enabling efficient and effective operations
Assess whether your Tax function has the right ‘mix’ of skill sets, technology, and processes to quickly adapt to business and legislative changes, model tax data efficiently, and deliver real-time insights to the business.

Managing Tax risk
Effectively managing Tax and related enterprise risk is an important responsibility of the function. Consider financial and reputational risk while designing and implementing operational changes.

Building a sustainable and scalable Tax function
Define what a successful Tax function means within your organization. Then, consider potential Tax operating model changes that are sustainable and scalable for future business needs.

Reducing Tax operating costs
Reimagine your tax operating approaches to drive cost savings and improve operational efficiency.



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Can your Tax function’s historic ways of operating meet the organization’s goals going forward?

Optimize your Tax operating model to meet regulatory requirements while strategically managing costs.
(Duration: 2:38)

  • Chris Yeaton (PwC US Operations and Tax Accounting and Lifecycle Support Leader, Insourced Solutions for Tax) - LinkedIn
  • Margie Dhunjishah (PwC US Tax Reporting & Strategy leader) - LinkedIn

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Theme 3: Data automation

Many Tax functions spend significant time on manual, repetitive, and low-value tasks – ranging from data extraction, manipulation, and execution of tax calculations to the actual filing of tax returns with multiple jurisdictions. An increase in demands from the broader business and outside stakeholders (e.g., tax authorities) combined with the pivot to a remote working environment has exacerbated the pain resulting from this human effort. Now, more than ever before, businesses and Tax functions need the ability to quickly adapt to changes in our environment.

Automation addresses these challenges by enabling the Tax function to better integrate data and processes, enhance analytic capabilities, and deliver better quality output in less time.

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The path to automation

The path to automation varies by organization due to a variety of factors, including existing process design and your current tax technology ecosystem. Many Tax functions still use spreadsheets as their primary means for calculation and analysis. Consider which solution, or combination of solutions, best fits your pain points and may optimize your processes:

Small Automation

Small Automation or ‘self-service’ automation solutions leverage flexible and adaptable technologies that can be implemented quickly at a lower cost and with less IT reliance than traditional big automation initiatives. These types of technologies include extract, transform, and load (ETL), data visualization, and analytics tools.

Robotic process automation (RPA)

Robotic process automation (RPA) is an option for performing structured, routine activities that are time consuming for humans. ‘Bots’ are computer coded software that mimic human activities, but more efficiently. Bots can free up time to perform valuable planning activities that

Artificial intelligence (AI)

Artificial intelligence (AI) is the ability of a machine to perceive its environment and perform tasks that normally require human intelligence. AI can be developed with the ability to sense, think, and act in ways that can out-perform human capability.

Tips for successful automation

Workflow management
Consider what tasks or processes are suitable for automation:

Component parts of a process, especially routine tasks that do not require deep tax expertise, can often be automated to reduce or eliminate wasted time. Review your current tax processes and identify pressure points where integrating automation may alleviate manual efforts, reduce financial risk due to human error, and increase bandwidth for Tax team members to perform more value-added tasks.

Workflow management
Automate what you can but don’t rush the process:

It’s ok to start small since automating too much too quickly could result in lower ROI, rework, and lost effort. Tax functions should spend the time on the front end designing an enhanced future process and deploying technology solutions for the components where a technology fix is most beneficial. This well-defined design of your desired process will allow you to identify needed quick-wins and develop a roadmap with planned timing for when all solutions can be realistically implemented.

Workflow management
Design and implement scalable solutions:

Automation solutions should be scalable to enable your organization to adapt to future technology and process needs.

Workflow management
Embed data visualization and analytics capabilities when automating a specific process:

These capabilities are often overlooked; however, Tax functions can better facilitate reviews, provide easy-to-digest data to stakeholders, generate real-time insights to support decision making, and help execute broader business requests in a more timely manner. More ‘dashboarding’ at the press of a button can allow Tax staff more time to analyze  results versus spending large amounts of time gathering data for presentations.

Workflow management
Ensure proper governance:

Consider systems access and protocols early in the automation process to protect your data and enhance your ability to pivot seamlessly, as needed, to manage risk during times of change. Align with the CISO and IT to develop the required security protocols, controls, and governance structure. Engage with other enterprise functions so that Tax has access to consistent, accurate data to feed automations.

What are the key performance indicators (KPIs)

Managing Tax risk:

Effectively managing Tax and related enterprise risk is an important responsibility of the function. Consider financial and reputational risk while adopting solutions, designing and executing controls, and developing Tax strategies.

Gaining process efficiency and effectiveness:

Adopting automation tools can drive process efficiency and effectiveness – e.g., improve speed and accuracy in pulling source data for the income tax provision and compliance processes.

Establishing sustainability and increasing agility:

Increasing complexity is putting a strain on Tax functions especially in a remote environment. The need to establish sustainable, agile technology-driven processes is critical to quickly adapting to business and tax law changes as well as driving long-term success.

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Your path to automation within the Tax function

Tax functions are in various phases of their automation journey. Learn how you can get started and what factors to consider.
(Duration: 3:21)

  • Dom Megna (Tax Reporting and Strategy partner and Data Automation leader) - LinkedIn
  • Balaji Ganapathi (Tax Reporting and Strategy director) - LinkedIn
  • David Resseguie (Advisory Director, Innovation) - LinkedIn

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Michael Shehab

Michael Shehab

Technology and Process Leader, PwC US

Marjorie Dhunjishah

Marjorie Dhunjishah

Tax Reporting & Strategy and East Region Tax Leader, PwC US

Christopher Kong

Christopher Kong

APA, Network and US Inbound Tax Leader, US Inbound Tax

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