The intelligent tax
function
2020 Global Tax Technology and
Transformation Survey highlights
Contents
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2
3
4
5
6
8
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Our perspective
Tax authorities are disrupting the
tax function
Focus on data source and
transaction-level information
Improving data quality to
provide tax insights
New skills for the tax function
The intelligent tax function
Transformation insights
A blueprint for action
Conclusion and contacts
About this study
This study includes survey responses from a group of 100 of the largest multinational
companies with median US$12b+ in revenue. The survey was conducted in May 2019 by
the EY Quantitative Economics and Statistics (QUEST) group and Wakeeld Research.
1
Our perspective
Kurt Neidhardt
Global Co-Leader and
Americas Tax Technology
and Transformation Leader
kurt.neidhardt@ey.com
+1 212 773 2283
Albert Lee
Global Co-Leader and
Asia-Pac Tax Technology
and Transformation Leader
[email protected]y.com
+852 2629 3318
Multiple megatrends are disrupting the very nature of global corporate
tax operations. The pace of regulatory change and the digitalization of
tax authorities, demands for transparency, technological advances and
the explosion of data are just a few of the forces redening how tax
functions must operate. Yet the technology, leadership and skills within
many global tax functions have not kept pace.
In the context of this digitally evolving marketplace, EY’s global survey was
conducted to gain insight into the current challenges of the tax function.
Among the varied perspectives we gained, there was one overarching
conclusion: tax functions must close the data and technology gap, and
do so as quickly as possible, if they are to keep pace with today’s rapidly
evolving demands.
This survey helps us paint a picture of what a high-performing tax
function will look like over the next several years, including the
increasingly essential capability to perform more advanced analytics.
The tax function of tomorrow must master data intelligence. That is
the foundation for what we call an “intelligent tax function,” where
every employee performs only the activities matching their skills and
experience, and where they focus more on building value rather than
making xes or wasting time on workarounds.
The path to an intelligent tax function begins with a strategic plan,
one that maps a new way of working, and incorporates new skills
and technology. It uses well-proven solutions to address persisting
issues and leverages the potential of newer technologies to make
a quantum leap in capability to be ready for tomorrow.
What will your journey look like?
13
The intelligent tax function | 2020 Global Tax Technology and Transformation Survey highlights
2
Tax authorities are
disrupting the tax function
4
Tax functions dealing with digital tax
administration (DTA) feel a noticeable
impact and are taking clear action.
They are more aware of the difculty in
monitoring these requirements and asserting
proper governance for government submissions.
of companies surveyed, with
global headquarters in countries
with digital tax administrations,
are organizing their response to
DTAs in a centralized and
globally consistent manner.
Companies surveyed with global headquarters in
countries with digital tax administration are
less condent in their monitoring
of these requirements.
for companies surveyed
that are dealing with
DTAs.
In spite of overall budget constraints, tax
transformation spend, annual technology
budgets and the hiring of data skills each
increase by more than
98%
31%
“
“
Automation and articial intelligence make use of
data, analytics and tools to extend automation and
analytics use cases, and enhance our realized
articial intelligence capabilities.
ATO Corporate Plan 2018-2019
“
We have spent a lot of money on technology at [the]
IRS, but have not spent enough.” [We plan] to bring
[the] IRS into the modern age of technology.”
Steven Mnuchin, United States Secretary of the Treasury –
IRS Strategic Plan 2018-2022
HMRC’s ambition is to become one
of the most digitally advanced tax
administrations in the world.
Making Tax Digital is making
fundamental changes to the way the
tax system works – transforming tax
administration
HMRC Making Tax Digital
“
…to further adapt to the needs of developing the market economy and tax modernization, the Shenzhen
Taxation Bureau has set a goal of ‘Building Smart Tax’ as its goal, and has organized and developed
a pilot for using blockchain to issue ordinary electronic Fa Piao invoices.
State Administration of Taxation Shenzhen Taxation Bureau Announcement 2018 No. 11 2018-08-09)
EY point
of view
Tax authorities are driving changes that are increasingly
impacting corporate taxpayers. These changes require
ling through digital methods, more information, more
real-time ling and the employment of data analytics for
risk proling and auditing.
+40%
Spreadsheets are often the symptom of
multiple data sources and systems not being
set up correctly for Tax.
While the tax function cannot control the number of ERPs,
it can inuence the design and governance of ERPs.
of those surveyed participate in
ERP implementations regularly or
full-time.
efciency
gains.
Those surveyed who participate in the ERP
implementation on average experience
45%
17%
3
Companies need to focus on data
sources and transaction-level
information
5
The intelligent tax function | 2020 Global Tax Technology and Transformation Survey highlights
of companies surveyed are dealing
with multiple ERP systems.
more time on data collection,
cleansing and manipulation.
Companies surveyed with 6+ ERPs spend at least
% time spent on data collection,
cleansing and manipulation
1
2-5
6-12
13-24
25+
7%
20%
44%
50%
55%
93%
6X
Number of ERPs
Only
EY point
of view
With Tax becoming more real-time and transaction-based,
tax functions should actively participate in the design and
governance of nancial systems to help ensure data quality
via correct processing at the time of transaction.
4
Improving data quality is the
key to providing tax insight
6
EY point
of view
The intelligent tax function thinks strategically about
the tax data supply chain and employs articial
intelligence-driven data intelligence and insights to
improve data quality, accuracy and efciency.
Clean data is required for all tax activities. Data quality is
dependent on the information accessible by Tax, whether
it’s accurate and sufcient to answer the most relevant
questions or just the basis for estimates.
When using data to drive insight, detail becomes even more crucial. As for the
promise of emerging technology, the simple truth is that even articial intelligence
and machine learning cannot analyze unavailable data any more than humans can.
What exactly is consuming all that time?
Data cleansing can broadly represent a wide variety of activities, most of which are symptoms of
people, process and technology gaps that exist prior to Tax receiving the data.
The level of data detail available is most inuenced by the primary source.
The majority of companies
surveyed still spend
of their time on data cleansing.
Seven of the most common activities:
Time spent
40%-70%
1 | Splitting accounts, cost centers or prot centers
2 | Making group-to-local GAAP adjustments
3 | Splitting data into correct locations or jurisdictions
4 | Splitting data into correct legal entities
5 | Reclassifying transactions
6 | Mapping
7 | Splitting or assigning correct trading partners
40% of the companies surveyed
are using a tax reporting package,
consolidations ledger or
disconnected spreadsheets as
their primary source for tax data.
60%
ERP systems or
Finance/Tax data
warehouse
40%
Spreadsheets, data
collect package,
consolidations
ledger
40%
efciency gains
are realized by companies surveyed
with multiple ERPs that build a tax
data warehouse as their primary
data source to reduce collection,
cleansing and manipulation time.
The tax function should seek maximum
leverage from the nancial reporting
technology investments made by the
enterprise while also using specialized
tax technology.
The survey results show that companies have a large appetite for increasingly
complex analytics, even when they can’t adequately perform the basics.
7
The intelligent tax function | 2020 Global Tax Technology and Transformation Survey highlights
EY point
of view
One of the critical goals of a tax function is to add
value by providing insights. Once data is harnessed and
managed, tax professionals can focus on adding value.
more efcient.
The companies that do are
Technology in use by tax end users
% adopted
Desktop
DB
End-user
cleansing
Enterprise
reporting
Visualization
57% 57%
51%
70%
50%
of companies surveyed do not use
commercial tax accounting software.
41%
of companies,
struggle with basic analytical
reporting capabilities…
are striving to incorporate
more advanced analytics
into key activities.
but
newer end-user data-cleansing tools have
already been adopted by
70%
51%
50% 68%
While decades-old technology such as
business intelligence tools have only been
adopted by
5
The tax function needs new
types of skills
8
EY point
of view
The tax functions that will be most successful in the
future are those that adapt to the way authorities are
administering tax. In addition to having traditional
technical tax and nance skills, tax functions will also
need to have technology and data skills.
The time has come for the tax technology function to become the
tax data function. Data sits at the intersection of process and
technology and touches every part of Tax.
Individuals with data and analytics skills as their core skill set will
comprise a larger portion of tomorrow’s intelligent tax function.
Today’s tax technology function can mean very
different things from one organization to another.
Maintain tax software
Process change
Tax data collection
Data cleansing
Report development
Maintain tax data warehouse
Microsoft ofce/ tax software
user support
The tax technology functions that act as
the interpreter between tax personnel and
incoming data — ensuring that data is t for
tax use — will be the most successful.
Tax software
maintenance
Intelligent data
management
Process change
Process change
Tax data
collection
Report
development
Today's
Tax function
Tomorrow's
Intelligent tax function
Top 3 activities
1 1
2 2
3 3
of companies surveyed plan to
increase tax headcount with
people with data and tech
management skills.
of companies surveyed report that
they need more skills with tools
their company already licenses.
When considering the abilities of existing staff,
73%
+60%
6
Transformation insights
9
The tax functions that will succeed in the next wave of transformation must get involved, taking
an active part in the transformation plan, strategy and execution.
Making meaningful change can be difcult without appropriate
planning and resources.
of tax transformations performed
by the companies surveyed do not
meet all of their objectives.
EY point
of view
Transformation needs to be approached strategically
and with focus. Tax leaders need to set a clear vision,
dene the business case to support the journey, commit
and obtain appropriate resources, and enlist sponsorship
from a range of stakeholders.
75%
Only 30% of tax transformations performed
by the companies surveyed are driven by Tax.
Only 49% of the companies surveyed
have a plan beyond the current year.
46%
37%
31%
32%
49%
1%
50%
24%
30%
Enterprise/
nance-driven
Improved risk
management
Improved M&A
integration
Business model
support
none
2+ years
1 year
M&A-driven
Tax-driven
Top 3 most commonly realized benets from
tax transformation
The intelligent tax function | 2020 Global Tax Technology and Transformation Survey highlights
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8
The intelligent tax function
Blueprint for success
A blueprint for action
Today’s working world demands an intelligent tax function, with a new way of obtaining, processing and
using data, bolstered by a new mix of talent, training and technology — all working together to create
sustainable, long-term value.
New tax operating models will need to be in place within the next few years. This intelligent tax function
will also be more tightly integrated with the rest of the business from an operational perspective, and will
leverage data and technology to deliver value to the business.
This tax function has the potential to be a very different place from the one we know today. Articial
intelligence will increase the opportunities for applying human intelligence. Tax professionals will be able
to analyze data, adding another skill to their tax resumes. The data aptitude gap that exists in today’s tax
function will close rapidly over the next ve years as companies hire more technologists and data scientists,
and supplement tax technical training with training on data management and analysis.
This combination of higher data quality, automation, new skill sets and realigned responsibilities creates
the best chance for tax functions to achieve the aspirational yet elusive mode of focusing on high-value
activities to create the intelligent tax function.
Intelligent
tax function
Talent
Begin to upskill your people in such key
technology areas as database concepts,
desktop data management and analytic tools
Tax technology
Continue to evolve your
internal tax technology
function from its roots to
become more engaged and
accountable for tax data tools
and relevant IT governance.
Data control
Some of the most signicant challenges across
the tax data life cycle are ERP proliferation,
data fragmentation and inadequate use of
nance or tax data warehouses/lakes. Champion
investments here to drive improvements in your
overall tax operating model.
Transformation approach
Establish a seat at the enterprise
transformation table and make
sure your tax function needs are
adequately addressed.
Enterprise systems
Leverage the system of original
entry – the ERP – and other data
repositories and be a part of
their governance and processes.
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9
Conclusion
Contacts
How can you transform into an
intelligent tax function?
Stand back and assess the landscape of
goals and reporting requirements
Set a vision and strategy, and then execute
Understand your end-to-end tax data
supply chain
Invest in technology skills
Get data correct at the source by setting
up your enterprise systems appropriately
for tax
Focus and dedicate resources to
transformation
Change is always unsettling, but this is also
a time to be excited.
The best days to be a tax professional are
ahead — including the enticing possibility of
spending the majority of time doing the tax
work that adds value.
Learn more at:
ey.com/taxtechtransform
Kurt Neidhardt
Global Co-Leader and Americas Tax
Technology and Transformation Leader
kurt.neidhardt@ey.com
+1 212 773 2283
Ralph Doll
EMEIA Tax Technology and Transformation
Leader
ralph.doll@de.ey.com
+49 221 2779 25678
Albert Lee
Global Co-Leader and Asia-Pac Tax
Technology and Transformation Leader
[email protected]y.com
+852 2629 3318
The intelligent tax function | 2020 Global Tax Technology and Transformation Survey highlights
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About EY
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About EY’s Tax Technology and Transformation Services
EY’s Tax Technology and Transformation (TTT) is a global practice that brings together
transformation strategists and technology professionals dedicated to helping organizations
redene the tax function to meet the demands of the digital age: from rapid business
model change and global transparency, to expanding digital tax administrations, escalating
reporting requirements and cloud-based solutions. Our objective is to help each client
transform the traditional tax function into a connected intelligent tax function, with an
operating model that thinks about data differently — one that’s integrated and addin
g value across the enterprise, embraces innovation, and is open to adopting advanced and
emerging technologies to fuel continuous transformation.
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This material has been prepared for general informational purposes only and is not intended to be
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specic advice.
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