Making tax transformation part of the fintech revolution
By Bruce Martin, CEO at Tax Systems
Tax is usually a smaller part of a business’ overall finance budget and, as such, may not be viewed as a priority area when organisations drive digital transformation of the department. However, tax technology is typically more widely used than general fintech due to the complexity of the processes it handles. As the fintech revolution continues to bloom, tax is in danger of being neglected, leaving companies at risk of missing out on opportunities to maximise their efficiency, warns Bruce Martin, CEO at Tax Systems.
The low profile of tax affairs is hardly a surprise: they are rarely seen as a priority when businesses embark on a journey of digital transformation, compared to the broader financial constituency. In addition, tax is largely driven by compliance, and if we look at tax transformation through the lens of Environmental, Social, and Governance (ESG) planning and implementation, we can see that many businesses do the bare minimum unless forced to do so by looming regulations. Furthermore, each company’s specific requirements, its position in the tax and finance lifecycle, and the competency of the tax team play significant roles when it comes to the budget allocation regarding digital transformation.
CFOs, who tend to come from accountancy rather than tax backgrounds, therefore concentrate more on areas more in line with their own experience and expectations. Which predictably means, compared to other finance functions, the allocation of the finance budget to digital tax projects usually represents a significantly smaller percentage.
But by ignoring the possibilities of tax transformation, companies are losing out on improved efficiency and sharper insights. And by treating tax as a compliance-related box-ticking burden, companies do only what is necessary to meet regulations beyond these limited goals.
Tapping hidden potential
However, interestingly, this scenario makes for a notable opportunity for positive change.
Delivering tax transformation at heart involves allowing tax professionals to maximise their strategic impact and concentrate on where they can really add value: evaluating tax strategy and optimising efficiency. At the same time, automation takes on the grunt work of repetitive, predictable tasks. The advent of AI might be ruffling feathers in many industries, but its real goal is to maximise productivity using advanced tools, not to replace jobs. For workers at the coal face, tax transformation frees them to jobs which match their skill sets, while automation takes care of the more mundane jobs. Overall, this means a beneficial, measurable impact on business outcomes.
It is critical to bear this in mind, particularly given the wider digitisation of tax functions at every level, not least HMRC itself, which is integrating technology into its capabilities and processes at an ambitious pace. As it continues to move towards creating a “trusted, modern tax administration system,” the resultant digital changes will shape how all companies interact with it.
At the end of the day, leveraging technology to enable tax transformation will make a positive impact on your business’ cash flow and broader financial strategy. However, companies can only take advantage of these benefits if they introduce a vision that sees tax as being about much more than simple regulatory compliance.
Instead, by seeing it as an integrated component of a wider digital transformation plan, it becomes possible to harness the abilities of both tax professionals and new technologies and tools for optimal impact. Looking forward, companies that provide tax transformation with the investment and strategic understanding it needs will be best placed to exploit the functionality, features and efficiencies that the digital age has unleashed.
