Enabling the tax department
of the future
The most effective, highly valued tax departments are those that manage tax risk while
identifying improvement opportunities through core tax management skills and proactive
collaboration with all parts of the business.
Since 2006, KPMG International’s member firms have monitored the evolution of tax
departments through a series of benchmarking surveys of those responsible for the tax
department around the globe. Our 2009 research, validated by the experience of KPMG
member firms working with some of the world’s leading companies, suggested that the
highest performing tax departments are also those that focus on getting the basics right
in three key areas:
1. improving accountability to clarify the tax department’s roles and responsibilities
within the context of a company-wide, board-approved tax governance framework;
2. improving standardization to automate and strengthen tax processes and controls
and ensure all tax compliance obligations are met; and
3. improving connectivity between the tax department and other business areas so
they work together as proactive partners in setting and advancing business objectives.
The focus on these areas makes intuitive sense. Clear accountabilities can ensure that the
tax department strategy is aligning with and supporting the wider company or enterprise
strategy and that their goals and performance measures are agreed upon with key
stakeholders. Standardization of processes and technology improves consistency, quality
and efficiency, allowing tax teams to spend less time on compliance and more on valueadding
pursuits. Connectivity and participation with all parts of the company -— from
boards and senior leaders to other functions such as Finance, Treasury, M&A, Marketing,
IT, HR, Sales and Procurement — are key to ensuring tax affairs are well managed and
boost the tax department’s value, profile and influence.
Our analysis of the 2012 survey results discusses the progress of tax departments
in these three areas. The findings show that they are making progress in improving
accountability and standardization but have more work to do in connectivity.
In the final section of this report, we identify the key threat to progress: the rising
compliance and audit burden, which risks attracting more time and resources away
from value-adding activities. We ask whether the challenges can turn into opportunities.
Without substantial improvements in getting the basics right, how can the leading tax
department of the future manage compliance responsibilities and be the proactive
business partner its colleagues need?