Creating a robust tax department

Is your tax department acting as your active internal business partner? Or is it the usual compliance and transaction-based unit that most large corporations in the Philippines have?

Over the years, the tax department has evolved within many dynamic companies, and is now a vigorous contributor to business growth. Many companies have realized that to fulfill the corporate vision, they need to elevate the focus of their tax specialists, from performing compliance and transaction activities to engaging in strategic collaboration and planning.

But how does one go about transitioning from compliance to collaboration? According to a study conducted by the Tax Services Division of Grant Thornton US, there are basic steps in transitioning a tax department.

Assess your starting point and determine the components of your corporate vision

Awareness of the tax department’s current status is the crucial first step toward determining what needs to be changed as you craft your vision of the future. Begin by assessing the evaluation done by senior executives and managers in the organization. Do they see the tax function as transactional and compliance-based? Or do they think it should be operating separately from the rest of the finance sector or operating independently altogether? Do they envision it to be an active player in the growth of the business by going beyond compliance?

An ideal vision encompasses its participation in strategic planning at higher levels, active collaboration with other departments including senior management, and broader responsibilities for risk management.

While the corporate vision you will be designing will be exclusive, it should still include these common and valuable components: close collaboration with the entire organization; integration and alignment with the finance sector; effective and swift decision-making capacities; expansive planning and minimization capabilities; well-leveraged analytics and insight; technological proficiency; a highly responsive and multi-skilled workforce; and appropriate risk mitigation and control.

Structure the process of bringing your corporate vision to life
Throughout the vision’s creation and implementation processes, leadership buy-in — including C-suite support — will be vital to ensuring cooperation and adherence to the plan. Universal recognition and acceptance of success, however, depends on the leadership at various levels.

Collaboration among the various departments and functions is crucial. Choose a transformation team that includes representatives from key areas, including those from the finance, information technology, human resources and legal departments. Delineate the different responsibilities and schedule frequent meetings to map the progress.

In addition, consider sourcing options for talents and expertise not available internally. Avoid allowing the process to bog down because of the lack of right people to fill up important roles.

With the right team in place, the vision will become more definite, from the establishment of the project and revision of management programs, to the setting of goals and measurements and the inception of enabling technological tools.

Manage the change
Identify an owner-champion (project manager) to oversee the whole transformation process. Strip off other duties so that the project manager is fully committed to the specific tasks that will bring the vision to reality

Cultural resistance to change is to be expected. Increase engagement and build toward ultimate adoption through a structured approach that begins with an explanation of the benefits of the vision. Earn buy-in by being transparent throughout the process, providing updates and meeting deadlines for incremental achievements.

Divide the long-term goal into increments, with a timeline for each achievement and key performance indicator describing the incremental wins. Build goal expectations into participant reviews.

Assess data sourcing, systems, and capabilities, then reconfigure or upgrade. If necessary, install enabling processing tools and schedule appropriate training of personnel.

Leverage technology’s potential in realizing the corporate vision
An advanced analytics platform optimizes access to a variety of data sources including preparation, exploration and visualization; project management and deployment of models and integration into business processes and applications; and risk mitigation through substantiating controls.

Business process automation sheds manual labor so that attention can be turned to higher-level processes. Automate mundane tasks that involve high work volumes, manipulation of data, frequent changes to underlying data (e.g., rekeying and recalculating), and work with high-error rates and standardized procedures.

There is a way to transform the traditional tax department into a valued internal business partner. Creating a robust tax department entails re-tooling its functions to fit into the company’s vision, guiding it throughout its inception and giving it tools and weapons not only to participate but also to lead in the company’s success.

Wendell D. Ganhinhin is partner overseeing tax and outsourcing, and is the head of P&A Grant Thornton’s Cebu and Davao Branches. P&A Grant Thornton is one of the leading audit, tax, advisory, and outsourcing firms in the Philippines, with 21 partners and over 850 staff members. For your comments, please email wendell.ganhinhin@ph.gt.com or PAGrantThornton.marketscomm@ph.gt.com. For more information about P&A Grant Thornton, visit our website www.grantthornton.com.ph.

As published in The Manila Times, dated 28 June 2017