Tax function of the future - trends and what to prepare for?

Recent studies conducted by PwC Denmark and PwC EMEA (Europe, Middle East & Africa) revealed insights into how heads of taxes think about the future and how they are preparing for it. The Danish “Tax Function of the Future” survey included interviews with more than 35 tax officers representing differ- ent companies and industries in Denmark. The study included a range of questions from operational to strategic matters where some of the questions were identical with the EMEA “Reframing Tax” study for Tax leaders.

Compliance is the number one priority in Denmark

The Danish study shows that tax departments must deal with an array of different stakeholders including tax authorities, legislative bodies, finance departments, and audit committees. Reporting to these different stakeholders means that tax departments must be on top of recent changes in regulations and combine this knowledge with the management of data across complex multi-step processes. 57% of all respondents answered that keeping up with compliance and reporting requirements is their most important priority. To meet this priority more than half of these respondents aim to transform their tax departments and introduce automation that enables more efficient compliance processes, freeing up time for other tasks such as leveraging data more effectively and providing stakeholders with better insights.

In EMEA, technology is seen as an enabler for change

In EMEA, technology as an enabler for transformation is high on the agenda for heads of taxes, where 83% of respondents see technology as a main driver for automating compliance processes. Yet the majority (71%) struggle with existing legacy systems and need technology that can supplement, not replace, their existing environments. The hopes are high that AI can be such a bridge builder. 34% of respondents very honestly answered that they lack the technical knowledge to understand digital opportunities.

Better reporting and insights are a hotter topic in Denmark than in EMEA

Comparing the results from the Danish study with the replies from EMEA, it appears that in EMEA more progress has been made with almost twice as many heads of taxes who have already designed a future tax operating model for their department, have a clear vision for enabling technology in tax processes, know the importance of tech upskilling their employees, and are executing these plans as we speak. The ambition level is high, however, In Denmark with 71% of Danish heads of taxes stating that they want to leverage technology to deliver better reports and more insights faster to their stakeholders, which is more than double the EMEA respondents. The results of the Tax Function of the Future study were presented at a PwC conference in Copenhagen including lots of ideas for automation, upskilling, planning and innovating. Based on these surveys and the success of the conference, the era of technology and automation has certainly arrived in the tax function.

Three key takeaways from the Danish survey

1. Automation is crucial for tax departments to thrive in their future mode of operation. Gaining knowledge of what is possible, including the role of AI, is vital, and there are many options available to deliver efficiency without replacing ERP and other legacy systems.
2. Taking responsibility for designing the tax function of the future is essential. The absence of a strategy will prevent many from achieving their desired goals, and there are significant efficiencies to be gained by considering how to organize oneself, upskill people, and leverage technology to be a game-changer for tax departments. 
3. Optimizing processes with technology can make a material impact. Investment in technology today is scattered across multiple solutions, yet the more significant impact can be seen by designing processes end-to-end first, and then using technology to automate a much larger part of the manual tasks, leaving time for human intelligence and improved quality. 

For more information on the tax function of the future and how PwC can assist you, please reach out to us to find out the possibilities and start enjoying the advantages.