The future of tax compliance
The Future of Tax Compliance
Outsourcing, tax technology and data analytics
As a tax recruiter, the future of tax compliance is a subject that has cropped up countless times in conversation over the past 12 months, which I expect will long continue.
The question still remains, where is tax compliance work heading? Different businesses have conflicting views on what the future holds. For many commercial organisations, the outsourcing model has been the path they’ve decided best suits them, meaning that countries such as India and the Philippines have continued to benefit as the chosen destinations for off-shored tax compliance work. The main benefit for the client, of course, being the cost saving through reduced salaries. Not only this, but these operations run 24/7. Clearly, the reduced labour bill is of huge benefit, but at what cost?
The offshoring process is a huge investment; one tax professional at a large financial services provider once told me it would take circa two years before the process becomes profitable. Businesses have to factor in the cost of implementing the change, the disruption to systems and processes as they are altered, without forgetting the time it takes to train the off-shore teams. Tax is not only complex but requires a deep technical understanding that takes years to learn and develop, with legislation and requirements that vary from country to country, making this a long and arduous process. On top of all this, there is of course the dreaded ‘reduced headcount’ discussion that affects in-house tax teams. When I meet candidates coming from a compliance background in commercial looking for a new opportunity, I sadly almost always know the answer to ‘What’s your reason for leaving?’
Despite all this, however, I believe the future is still very bright for tax professionals for the following reasons:
As mentioned earlier, tax is a complex and niche science, with Australian tax in particular requiring years of development and consistent upskilling. There is a finite number of professionals in the market and rules and regulations aren’t relaxing. To the contrary, they’re tightening even further and multinational corporates are top of the hit list. For this reason, it is imperative that organisations continue to invest in their in-house teams so that, if this is not yet the case, they become an integral part of the business moving forward: pro-active, not reactive.
So how do I see tax compliance developing? One word – technology. In the same way that Uber has disrupted the transport industry, tax professionals must also endeavour to jump on board with the change or risk getting left behind. This applies to both corporates and professional services. Commercial organisations should continue to enhance existing processes, with firms increasing their technological offering to their clients, to help them mitigate risk and future proof their businesses. Over the next few years, I believe we’ll see a shift from offshoring to a partnership of deep tax technical understanding with software developers and data analytics experts. Through technology and innovation, tax compliance work will become streamlined, thus driving efficiency and resulting in cost savings.
What does this mean from a recruitment perspective and what advice would I give to tax compliance professionals? I would say that the onus is on you to up-skill yourself and fully immerse yourself in the business partnering that all employers now look for on your resume. If your current role isn’t offering you these kinds of opportunities internally, ask yourself ‘is there a better option out there?’ as there most likely will be in this candidate driven market. The tax team should be observed as a value add service, not an expense.