The challenge therefore is how the tax department can manage the increasing compliance burden while addressing the demand for value-added input. In this context, it is interesting that respondents are generally satisfied with current levels of tax department resources and investments: administrative budgets are the same over the past year for 68 percent of respondents and 79 percent say budgets are sufficient. And as noted, 74 percent of respondents say the level of investment in technology and process improvement for their tax department is “about right.”
The satisfaction suggests that they may not fully appreciate what the future challenges could include — in particular, tax investigations and disputes and the developing tax authority approach to taxpayer compliance will test their ability to manage compliance in the coming years.
As they struggle to cope, leading companies know that a transformational approach can show the way. KPMG’s research notes the following steps as crucial elements as a blueprint for change:
- Strategy – align the business vision and strategy
- Communication and measurement – set KPIs that measure all contributions
- Effectiveness and efficiency – align the operating model
By taking a proactive approach and building a strong case for an effective tax framework, companies can gain confidence that their tax affairs are well managed and support the overall business goals.
Blueprint for change
- Establish a common purpose by aligning strategic goals and objectives of the tax department with those of the wider company.
- Define one view of performance to monitor effective tax management by clarifying requirements and how performance is measured and valued, through agreed-upon KPIs.
- Ensure the tax department has high-performing teams with the right number of tax professionals and the right mix of training, skills and experience.
- Embed processes to realize the tax management strategy in a way that is measurable and sustainable for the long-term.
- Set systems and procedures to produce, exchange, and distribute timely and accurate information to the right people, at the right time, and in the right format.
- Employ enabling technologies (e.g. enterprise resource planning systems, tax software) to automate labor-intensive processes that consume resources and increase risk.
- Influence stakeholders by understanding their goals and constraints and communicating with them to help achieve the goals.
- Set processes and priorities and align the tax department’s structure to promote connectivity and collaboration between tax teams and other departments.
Read the full report (PDF 848 KB) for more insight and recommendations.