RONAN FERRY
Tax Partner Deloitte Ireland
Ronan Ferry leads Deloitte Ireland’s Tax Management Consulting practice. He advises clients on tax technology innovation and transforming their tax functions through people reskilling, process redesign and technology implementation. Below, he explains how Covid-19 has disrupted how tax professionals work.
As a profession, ‘resilient’ is how I would describe the reaction to the current environment. For almost every tax function, the past four months have brought a new meaning to the concept of ‘disruption’. Disruption was previously considered a transformational concept to adopt technology, drive automation and explore analytical insights. Instead, disruption as to how and where we work is driving the need for the same transformation — disruption in where we work has accelerated the disruption on how we work!
In the initial stages of the pandemic, the focus was very much on continuity while working remotely, ensuring that tax professionals were responding to the crisis in a practical way, to generate cash and to meet internal and external tax-reporting obligations. The reality is that since the start of this crisis, the tax function has become a cash generator for many companies. Indeed in some companies, tax refunds and subsidies have been the only source of cash while business operations remained closed.
Tax teams have quickly realised that they can no longer work in silos. Team members needed to become aware of what everyone was doing, in and outside of tax, with no overreliance on one person. The collaboration and business partnering with IT, finance and treasury has never been more important. It has sparked the review and adoption of more technology in tax, beginning with communication and conferencing tools, to collaboration and document-sharing tools, to workflow management tools.
By virtue of Covid-19, there is an increased importance on having easier and quicker access to tax data, to fulfil obligations and to handle new tax measures being introduced across the globe. Progressively, more needs to be done with the same resources. With hiring freezes in place for many companies, looking to automation as a means of freeing up resources is one of the most common discussion points we are having with clients. A greater emphasis is on understanding and executing tax processes more effectively and efficiently.
To understand future business impacts, management has needed to develop and articulate the tax implications of a range of different scenarios, and many tax functions have struggled to get timely access to the enterprise finance and tax data necessary to run sophisticated scenarios. This has resulted in many tax teams having to dedicate additional time to manage the data and introducing analytics for scenario planning and forecasting. This has validated the benefits of properly integrating the tax function into company-wide ERP systems.
Perhaps predictably, the pandemic has motivated many companies to consider and upgrade their use of technology, ERP and financial management systems. With this in mind, it is important for tax functions to ride on the crest of any automation or transformation wave in their companies. Management and tax professionals are increasingly starting to realise that if tax isn’t at the planning table, they may be missing out on significant upside opportunities. Maybe even more importantly, they could even be opening themselves up to unforeseen risks.
Notwithstanding any wider organisational initiatives, I would also encourage tax teams to consider their own needs and areas for improvement. The lessons learned from this crisis suggest that yesterday’s tax operating model is no longer fit for purpose in a postpandemic environment. Tax leaders should therefore start to plan for a more agile, sustainable and responsive tax function. Now is the time to start contemplating a future tax-operating model and taking some time to develop a tax transformation roadmap.