While it’s never been easy to be the head of a multinational business’ tax department, the bar for good performance is higher than ever. Indeed, according to in-depth interviews conducted with CFOs from the world’s largest organizations as part of Deloitte’s latest Global Management of Tax survey, CFOs expect their tax leaders to do much more than calculate and file taxes accurately and on time. Finance chiefs are now calling on tax leaders to be a trusted advisor to the business.
How’s that working out so far?
The results of Deloitte’s survey show CFOs have a good level of confidence in their tax leaders’ abilities to manage their global tax position and manage risk. However, CFOs see room for improvement in how their tax teams make the best use of the technologies and data available, which could help them drive stronger business insights. CFOs are also looking for tax to enhance its delivery model, which may help their tax teams enhance return on technology investments. Most importantly, they expect tax to strategically engage across traditional organizational boundaries and add more value.
Meeting—and exceeding—the new expectations
As the Deloitte survey revealed, CFOs are quite confident their tax leaders are meeting traditional expectations, even in today’s world of ever-shifting regulations, new technologies, and talent shortages. But they increasingly expect their tax leaders to take a more future-focused approach to bring valuable insights to the table.
Let’s examine ways tax leaders are meeting existing expectations—and how they can improve—through the lens of the core areas of focus for global tax groups.
Get it done
The most fundamental tax department priority is to do the job of compliance correctly by filing accurately, on time, in every country, and across every process. First and foremost, CFOs are looking for tax to manage risk by avoiding audit issues and financial penalties and mitigating reputational fallout from tax.
According to CFOs interviewed in the Deloitte survey, they are fairly confident that their tax teams are managing risk effectively.
One factor in tax departments’ ability to get the job done is the deployment of technologies, including enterprise resource planning (ERP) systems, data repositories, and data wrangling tools. Other innovative technologies including robotics and artificial intelligence are increasingly being evaluated and deployed, but tax organizations are still discovering how to leverage those technologies to realize incremental value.
Gain control
Another baseline priority for multinational tax departments is to maintain visibility and governance globally while retaining local control. CFOs also have confidence that their tax leaders are achieving this goal.
A go-to solution used by many organizations to maintain visibility, transparency, and governance globally is to consider new ways to structure their tax departments. While there is no one-size-fits-all structure, multinational businesses are resourcing more from their own shared services centers, using traditional outsourcing, and outsourcing via an operate model.
Reap more from less
Tax leaders are also tasked with reducing the overall cost of delivery and risk management while increasing return on investment. Here, CFOs are looking for their tax groups to deliver efficiencies, not only through cost reduction but also by optimizing their tax delivery model to realize value from technology investments.
While the push for greater transparency by regulators and investors is propelling increased technology spend, including data analytics, CFOs in the Deloitte survey responded that tax teams don’t seem to be fully using the data to drive commercial value. Harnessing the vast amounts of data available across an organization will be a key factor in delivering more value to the business.
Face the future
Today, more than ever, it is critical for tax leaders to help prepare the organization for tomorrow’s challenges. Toward that end, CFOs want their tax team to collaborate with the business and maintain an ongoing dialogue by offering proactive advice and providing perspectives on future regulation.
Here again, revisiting an organization’s tax structure is a way to achieve this goal by freeing up resources to focus on higher value-add areas. For some businesses, an operate model is an attractive option to achieve more predictable costs and access to a broader resource base. For others, conventional outsourcing is a preferred choice. But whatever the solution, tax organizations are actively pursuing ways to optimize their structures.
Discover value
As we have seen from the Deloitte survey results and analysis, it is important for tax leaders to look for ways to free up talent and explore undiscovered areas to find new opportunities for tax and the overall business. In line with this imperative, CFOs are looking for their tax teams to fully understand regulations and the business to provide strategic tax advice—and uncover new insights.
While many tax leaders are taking the steps outlined above to deliver greater value, it is important to define what value means to their business—after all, value can mean different things to different organizations. Here, it is critical for CFOs and other key business stakeholders to work with their tax leader to clearly define value in the context of their organization. They can then work together to take the actions needed to go about delivering it.
The goal? Delivering confidence.
When the above five imperatives are met, tax organizations are well on their way to delivering confidence to the business—and meeting the heightened expectations of their CFOs.
As CFOs look for their tax teams to focus increasingly on advisory and value-added activities, they are greenlighting investments in new technologies and pushing for more efficient operating models. These moves may allow compliance and reporting to continue progressing on their vision of the future tax organization, while bringing new value to the business—starting today.
Jen Knickerbocker is the Global Tax Compliance and Reporting leader, Deloitte Tax LLP. Sandy Cockrell is the Global CFO Program leader at Deloitte.