Today’s tax functions have the potential to be critical assets to their organisation—drivers of transformation and pioneers of a connected, data-first culture. How can they best communicate this potential? Tax leaders need to hone their ability to communicate their vision; however, a recent survey conducted by Industry Dive, a top journalism company, in conjunction with Ryan, revealed a great divide between CFOs and company tax department heads.
The poll showed that while senior tax executives viewed the tax function as generally effective, a large percentage of senior finance executives have a very different perspective, with nearly one-third viewing the tax function as ineffective in optimising tax recovery and identifying the tax consequences of major transactions. One in four finance executives also viewed the tax function as ineffective in containing costs and communicating with the finance department.
The survey results point to a larger underlying problem for tax department heads. They face a steep challenge in demonstrating to the C-suite the strategic value the tax function can contribute and securing investment in the tax function to build out that strategic value. Given this reputation deficit, how can tax departments enhance how they are perceived by C-suite and finance leaders?
What’s Causing the Divide?
First, tax practitioners should understand the cause of the perception divide. “The survey results aren’t all that surprising,” says Suzanne den Breems, Principal and VAT Recovery Practice Leader at Ryan. “Tax teams tend to focus on risk mitigation in areas that can lead to the biggest problems, leaving team members siloed as they devote their bandwidth to this integral but low-level work.” Tax can, in this way, become disconnected from the priorities of finance, and finance leaders rarely see evidence of the high value a tax department can bring at its best.
“Most often, tax is focused on compliance as opposed to optimisation because a tax audit is what keeps them up at night,” den Breems says. “Being able to work on recovery or strategy or transformation is a luxury of time they don’t have.”
Five Steps Tax Executives Can Take to Reinforce Their Reputation Among CFOs
While it may be a daunting task, the following five steps can be a simple start to a longer journey that culminates in a forward-looking and forward-solving tax department.
Tax heads face a steep challenge in bridging the perception divide between themselves and CFOs, and they’ll need to face that challenge head-on to secure investment for building out a strategic tax function. To accomplish this, tax heads need to communicate the need for change; find efficiencies with the help of outsourcing if necessary; improve data quality; and become an internal tax resource for strategic planning and maximising VAT recovery to contribute to business profitability.
To read the full findings of the recent survey of tax and finance executives across Europe, download our new report “Building a Case for Change — How to Amplify the Strategic Value of Your Tax Function” now.
- Practice Areas
- Abandoned and Unclaimed Property
- Business License Tax
- Communications Transaction Tax
- Credits and Incentives
- Employment Tax
- Fuels and Excise Tax
- Income Tax
- Insurance Tax
- International Tax
- Property Tax
- Ryan Advocacy
- Ryan Software
- Severance Tax
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- Transaction Tax
- Value-Added Tax