Finance teams have played a leading role in the adoption of technology to transform previously inefficient manual or spreadsheet-based processes. While investment in tax and transfer software has tended to lag that in core finance systems, adoption is maturing and pressure from the office of the CFO to implement digital tools is beginning to grow.
These times of change helped drive take-up further, as gaps in operational systems caused by poor processes were exposed by the need to have people work remotely. There is a subsequent demand in organizations and multi-national enterprises for people who understand the technical intricacies of tax and transfer pricing, as well as the technology that helps to manage those disciplines effectively.
Tax Professionals Needed
Tax planning and reporting have risen to the top of the corporate agenda. Greater scrutiny of multinational organizations’ tax arrangements following the pandemic will be driven by governments’ ambition to gather optimum tax dollars to pay for higher levels of borrowing.
International tax regimes are also undergoing significant change, driven by the need for more transparency and accountability. In October 2021, 136 countries agreed to enforce a corporate tax rate of at least 15%, as well as a fairer system of taxing profits where they are earned.
Mathias Cormann, Secretary-General of the Organisation for Economic Co-operation and Development (OECD) said of the announcement: “[This] is a far-reaching agreement, which ensures our international tax system is fit for purpose in a digitalized and globalized world economy. We must now work swiftly and diligently to ensure the effective implementation of this major reform.”
A second important factor accelerating demand for tax specialists is the new focus on environmental, social and governance (ESG) and corporate social responsibility (CSR) agendas. Corporates recognize the need to demonstrate a move away from aggressive tax strategies in the face of greater scrutiny by regulators and stakeholders alike, while still maintaining profitability and growth.
It’s not surprising that recruitment companies are reporting a strong appetite for tax professionals who can help corporates deal with such seismic change. In its Salary & Recruiting Trends 2021 guide, recruiter Hays said that, while finance and accounting skills in general are in high demand, tax experience is particularly valued.
The guide observed that: “Encouragingly, over half (54%) of employers plan to hire new [finance and accountancy] staff in the year ahead – actually higher than last year (50%). These hiring plans are most prevalent for tax (75%) and audit, risk and compliance professionals (73%).”
The Rise of Tax Technologists
There’s an increasing recognition that effective tax planning and reporting can no longer be handled manually or with tools such as spreadsheets.
As Paul Aplin, former president of the Institute of Chartered Accountants in England and Wales (ICAEW) writes: “We live in a world awash with data and the world of tax is no different. Effective compliance, reliable insight and informed advice all depend on the availability and accessibility of accurate data. Digital technology provides the only realistic way of rendering large volumes of data into a usable form in a practical timeframe.
It means that corporate tax teams require access to professionals with experience of both technology and tax, who can optimize software, improve processes and collaborate with the wider finance team as well as decision makers.
“Technology has driven–and continues to drive–a trend in which finance and tax functions move closer together,” Aplin continues. “It has been routine for tax departments to have to extract the information they need from systems designed primarily for financial reporting. In large organizations, this can require significant amounts of resource and (potentially) programming skills. Structuring data in a way that recognizes the importance of tax from the outset is far more efficient than a silo approach and common data models will be key enablers of a more holistic process.”
The impact of these changes on the make-up of tax teams are already being seen, according to international research undertaken by Deloitte with tax leaders. In the second of its three-part Tax Transformation Trends series, it explains how technology will alter the skills mix required.
“Tax leaders recognize that their teams need entirely new technical skills, with data analytics (45%) and technology transformation (43%) at the top of their wish lists,” it says. “However, these team members also need to flex their cross-business advisory (39%) and interfacing and education (35%) skills. This means they must upskill and diversify the roles on their teams to meet increasing business advisory demands.”
Preparing for New and Different Demands
Despite the rise in the importance of technology, human tax knowledge and advisory skills will always play a part in planning and reporting. What has changed is the way in which tax teams can use tech tools to automate the time-consuming and resource-hungry elements of their work, notably sourcing and formatting data, particularly at year-end.
Dedicated tax software enables teams to work on data that is automatically derived from core finance systems and constantly updated, then share reports with the wider business. This includes mid- and long-term forecasts, as well as “what-if” scenarios that help senior leaders prepare for the future, however unexpected that might prove to be.
As a result, the tax team becomes more strategic to the business in terms of forward planning, risk mitigation, and regulatory compliance. The benefit to tax professionals is a more rewarding career with opportunities to add more value to business performance.
The place for tax professionals to start is by understanding as much as possible about how tax functions are changing and where technology will play a role. If organizations have not yet invested in tax software, there may be opportunities to highlight the top-line benefits it can bring, including financial and reputational risk mitigation as well as operational efficiencies.
While technology skills are increasingly built into tax training at undergraduate level and beyond, there’s a great deal that tax specialists already working within the profession can do to update skills themselves, whether that’s attending webinars or reading about tax transformation.
The impetus behind the adoption of tax software is growing quickly as a result of changing regulations and a recognition that managing tax documents manually is now untenable. The good news for ambitious professionals is that demand for the right skills will only continue to accelerate in the years ahead.
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