Driving i4.0 value with your supply chain
Driving i4.0 value with your supply chain
Event

Reimagining the tax and finance function

Today’s tax departments are rapidly evolving to address new regulations and growing complexity.

Moderator

David Leiter

David Leiter

Partner, Tax, KPMG US

+1 404-222-3350

Panelists

Lauren Herschman

Lauren Herschman

Partner, Tax, KPMG (US)

+1 410-949-8447
Chris Novoa

Chris Novoa

Managing Director, Tax, Ignition, KPMG US

+1 414-226-1323



Today’s tax departments are rapidly evolving to address new regulations and growing complexity, according to the panel of KPMG tax advisers.

A technology-first holistic approach

Jono Anderson David Leiter, Partner, BTS - Tax, KPMG (US)

Citing a recent survey by KPMG of 300 Chief Tax Officers (CTOs), BTS Partner David Leiter said that three quarters of respondents are “bullish about growth and growth of the company.” While positive, this means increased work for tax professionals who are expected to do more with less. Meanwhile, the vast majority of respondents, 90 percent, said they are changing the way they do tax planning because of tax reform.

As such, technology plays an increasingly important role in the tax function, he said. “As our organizations become connected enterprises, the stakeholders who work with tax are going to want responses instantly. Saying, ‘I'll get back to you tomorrow’ is not going to be good enough.”

However, less than half of survey respondents reported that their tax function is keeping up with the rapid evolution of technology. One of KPMG’s solutions, Tax Reimagined, is a technology-first holistic approach designed to reduce costs, optimize quality, and uncover value, Leiter said. KPMG invests more than $100 million a year in tax technology through Tax Ignition, a multidisciplinary resource focused on tax transformation, as well as through other means.


This technology investment is being used to design operating models for the tax function to help realize both immediate and long-term benefits. For example, many companies aren't claiming the research tax credit even though it could amount to seven or eight figures of permanent tax savings, he said. “Why aren't they doing it? Well, they can't get to the data needed to defend the claim. With data enablement, now you can do that—you can unlock that value.”

Potential with blockchain

Chris Novoa, Managing Director, Global Tax and Transformation, KPMG (US)

Novoa, a partner in Global Tax and Transformation, focused on how technology is—and is not—used by tax functions today. According to the KPMG survey, only about a third of CTOs say they are receiving timely insight on the impact of technology or using data analysis to make informed decisions, “categorically a low amount.”

Whether it’s reporting, compliance, or another area of CTO responsibility, “every one of these work streams…relies on the data of the enterprise in order to get it done,” he said. As such, 79 percent of CTOs say that data analytics is one of their leading investments, and 76 percent say they are making investments in emerging technologies.

“Everybody in tax relies upon the data to drive what they do,” Novoa said. With data enablement technology, tax professionals can import data from worldwide global systems, supported by tools such as QlikView and Tableau to enable quick analytics.


At the same time, blockchain technology innovation holds significant potential for the tax function, he said. Blockchains are a way of ordering and verifying transactions in a distributed ledger, where a network of computers maintains and validates a record of consensus of those transactions based on an encrypted audit trail.

Within tax, blockchain can help ensure that transactions are accurate for counterparties while preventing access, deletion, or the corruption of information by bad actors. Blockchain-enabled “smart contracts” are stored and replicated on the system and supervised by the network. Any third parties in a transaction, such as an auditor or a bank, have direct visibility to it in real time.

Blockchain “is fundamentally changing how certain businesses can be done,” Novoa said. “It erases the inefficiencies, and it eliminates risk of tax overstatement due to the fact that you didn't collect the right markup....If you've ever been burned on getting penalty and interest for not reporting the right amount due to the fact that the transaction captured in the existing technology wasn't right, the blockchain makes great sense.”

The sourcing continuum

Lauren Herschman, Partner, BTS – Tax, KPMG (US)

BTS Partner Herschman provided an assessment of how corporations are sourcing their tax and finance resources with solutions ranging from full internal staffing to comprehensive lift-out solutions in an effort to address a host of issues.

“We're spending a lot of time with departments of all sizes, in all industries, with all different levels of global footprints assessing their internal needs and the problems they're facing,” she said. Many clients are having significant staff turnover at the lower level as well as technology issues based on outmoded technology. “All that impacts their efficiency.”

Herschman stressed the importance of workshops to uncover the details. For VPs of tax and above, “you may think you know what your people are doing, but you don't really know until you start asking,” she said. Different employees might be pulling data from different areas with different methods, for example. “When you start to lay out those step-by-step items, it can be eye-opening to what's going on in the department and what's really frustrating to them.”


Looking at the broad picture, Herschman said that maybe 15 years ago, the tax function was viewed as being either an in-house or outsourced solution. Now, there is a lot more play in between. KPMG has made investments in technology and can share innovation with clients without license fees. As a result, she said, “that kind of midpoint of co-sourcing has become a much more popular option for people to consider.”

To access this panel’s presentation, please click here.