How tax functions can maximize values for businesses

Ahmad KamalAhmad Kamal    31 May 2022
How tax functions can maximize values for businesses

With high inflation rates and the expectations of slowing global economic growth, it is increasingly important for businesses to enhance their value maximization functions. Functions leaders therefore need to raise the bar and become more agile and proactive! The tax function is no exception.

The fast changing Middle East and GCC tax landscape as well as the international tax initiatives and updates are putting more pressure on the tax functions across all industries to enhance tax compliance and strategic planning. The impact that tax functions need to have today on their organizations is unprecedented. The key pillars for tax function transformation in my opinion are data technology and people, in no particular order.

Tax, being a quantitative area, can massively benefit from data analytics that introduce new fresh perspectives of looking at data, paving the way to identifying clear objectives for the tax function and maximizing the value that a tax function can add to the business. Data hubs are becoming a trend in the tax management, and wider finance, world. There are multiple sources of data within each organization that tax functions should rely on to find solutions, not only for tax compliance and reporting but also for tax planning, M&A transactions and Effective Tax Rate “ETR” projections. Many companies are migrating to cloud to benefit from a more streamlined data flow to increase efficiency and agility.

Tax executives will face pressure to have a clear vision of which data they need, how they want data presented, how to build the proper data mapping and tie it to the overall objectives of their functions and how to constantly improve data management and presentation. This  is what makes data visualization and statistical analysis tools a trend between tax executives across all industries.

The other big piece of the puzzle is data management. In a world where businesses generate massive volumes of data everyday, a tax data infrastructure becomes crucial in the process of using data to find solutions and solve problems in an agile manner. Tax data infrastructure helps integrate all information coming from the different departments to map the tax function’s objectives as well as properly plan for these objectives to be achieved. Enterprise Resource Planning “ERP” systems are evolving everyday and it is on the tax executives to have a clear vision on how to make the ERP output data as “tax ready” as possible.

The tax authorities are keeping up with the trend and are increasingly relying on technology to enhance their controls and collect as much taxpayer data as possible. Unsurprisingly, in developing countries, this is not just limited to financial and economic data but also includes gathering data from social media platforms. The Internal Revenue Services and Her Majesty Revenue and Customs have both been using data mining and analytics systems to compare the tax records of individuals with their lifestyle to establish tax fraud.

With the tax transparency measures put in place and the other information exchange initiatives, data is streaming between governments and tax authorities like never before and more focus is placed on transparency. 

Businesses are facing unparalleled pressure in a world of uncertainty coupled with the negative global macroeconomics outlook. Tax functions will have a greater role going forward towards building, maintaining and developing value maximizing mechanisms to their business in a fast changing region like the GCC and, as it has been in recent years, technology will be key in achieving the function objectives.

 

Disclaimer: Content posted is for informational & knowledge sharing purposes only, and is not intended to be a substitute for professional advice related to tax, finance or accounting. The view/interpretation of the publisher is based on the available Law, guidelines and information. Each reader should take due professional care before you act after reading the contents of that article/post. No warranty whatsoever is made that any of the articles are accurate and is not intended to provide, and should not be relied on for tax or accounting advice.

You can access Law including Guidelines, Cabinet & FTA Decisions, Public Clarifications, Forms, Business Bulletins for all taxes (Vat, Excise, Customs, Corporate Tax, Transfer Pricing) for all GCC Countries in the Law Section of GCC FinTax

 

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