In a business environment CEOs have described as uncertain and disruptive, it is critical for CFOs, board members and tax departments to keep a close eye on key tax issues. As tax continues to be a key driver of success in 21st-century organizations, especially as prospects for substantive U.S. corporate tax reform seem more certain than they have in several decades, the watchword of success is nimbleness, and tax departments are under growing pressure to provide value to their organizations.
With these increasing demands and likely upcoming changes in mind, here is a short list of action items business leaders can take to stay on top of taxes in 2017.
For the first time in decades, the prospects for substantive tax reform appear very good — if Senate Republicans and Democrats can agree to the outlines of a major tax overhaul, or if Republicans can push through the plan on their own. On the table are significant corporate rate reductions, a tax system where only income earned inside the U.S. is taxed, a border adjustable tax and special rates for pass-through income.
But U.S. tax reform will include much more than just rate reduction, and any plan may have winners and losers. If they haven’t already, company leaders need to begin modeling potential impacts of various proposals on their organizations. They may wish to engage in the public debate as the process moves ahead, as reform could be quick and unpredictable, and company leaders shouldn’t miss an opportunity to express themselves and their interests.
It could also be prudent to invest early in some “blue sky analysis” of projects to undertake or investments their companies might want to make if more resources become available. That way, if and when reform comes, they’ll be ready to move off the starting blocks quickly and smoothly.
Tax reform isn’t limited to the U.S. In fact, multinational companies have been and will continue grappling with the impact of the OECD’s Base Erosion and Profit Shifting (BEPS) initiative in countries where they operate this year — especially around country-by-country reporting.
On the plus side, we’ve seen that complying with new regulations can often improve business operations. Implementing systems that unlock and share tax data and exchange information across the entire organization can often give companies a competitive advantage.
New and changed tax laws, more demands from global regulators and an increased risk of audits are making tax compliance more complicated, time-consuming and costly. As such, transforming tax departments into state-of-the-art, scalable, integrated compliance functions should be on every chief tax officer’s agenda in 2017. Being able to access and act on information quickly, with minimal disruption to the business, can lead to important benefits and identify cost-saving opportunities or overpayment situations, helping support the company’s bottom line.
It’s possible that 2017 will be the “year of the ‘bot,” and savvy tax and business leaders should be ensuring their workforces are digitally enabled, leveraging data and analytics, automation, robotics and cognitive intelligence to enhance their organizations’ processes. Combining technical tax knowledge, large sets of data and powerful new tools can enable CTOs to help their organizations make smarter, innovative, real-time decisions that positively impact the bottom line.
There’s another reason tax departments want to ensure they are up-to-date with innovation and new technologies. As the scope and role of the tax function continue to evolve, they need business-minded, digitally-savvy tax professionals who can be collaborators within their teams and the broader organization. Sometimes it can be difficult to attract, develop and retain these professionals in tax departments, but committed leaders know that investing in rotations, cognitive training and leadership experience will help their people develop the skill sets and knowledge they need to help their companies succeed.
Financial leaders who pay attention to and act on these five business resolutions should find by year’s end that their tax organizations are more nimble and efficient, and staffed with people who are excited about what they do every day.
Randy Sledge is the Tax Partner-in-Charge of the KPMG Dallas, Fort Worth, Denver, and Oklahoma City offices. He has more than 30 years of experience and his clients include FORTUNE 100 multinationals, including public and private mid-market and start-up companies in the retail, manufacturing, distribution and software industries.