Transforming tax
through integration
with nance
How tax and nance are
becoming a transformative
force within their organization
Contents
Introduction ..................................................................... 3
1. The importance of designing a technology roadmap
linking tax and nance ................................................. 4
2. The case for aligning tax and nance ........................... 7
3. Collaboration — leveraging ERP implementations ......... 9
4. Winning the race for talent ........................................... 12
5. Steps for successful transformation ............................. 14
About the survey ............................................................. 16
3EY 2022 Global Tax Technology and Transformation Survey Transforming tax through integration with nance
Tax is integral
As the world emerges from the COVID-19 pandemic, these
forces have triggered in the need for transformation, both
nance transformations and the integration of nance
and tax.
And so, we nd the tax function at a point of inection
for change. Conventional operating models are no longer
t for purpose. Those who continue to cling to them risk
falling foul of the fast-paced regulatory change, adding to
already spiraling costs, and missing a golden opportunity
to add value to the broader business — whether that’s
guiding sourcing decisions with knowledge of duties and
tariffs; inuencing expansion strategy by highlighting
available incentives; or even helping to fund large-scale
transformations by optimizing tax credits available for
doing so.
To meet this potential, tax must redouble its collaborative
efforts with nance to digitally transform their operating
models, and ensure they are sufciently resilient and
future-proofed to deal with disruption in the months and
years ahead. Key pillars of this transformation will be to
review processes and data, and to use technology to link
together the tax and nance functions.
“Business operating decisions have long been based on
nancial information and reporting, but the trend we're
now seeing is that tax can have a very large impact on
business operating decisions too,” says Daren R Campbell,
EY Americas Tax Technology and Transformation Leader.
“But tax departments of today are like archeologists — in
order to determine future tax implications, they look at
transactions that happened sometime in the past. If tax
strengthens the bond with nance, using tech to bring its
work closer to real time, businesses can effectively factor
tax in as part of the broader decision process.”
Indeed, there are huge opportunities to be gained from tax
strengthening its bond with nance and positioning itself
at the vanguard of transformation. If these departments
can achieve greater alignment, they will not only keep
pace with rapid change; they will succeed in becoming a
transformative force within their organization, increasing
its potential to thrive in an uncertain future.
Tax teams around the world are facing a tax landscape that is growing dramatically
more complex and competitive. New reporting and regulatory paradigms are
emerging — including digital tax ling requirements, environmental, social and
governance (ESG) reporting, and base erosion and prot shifting (BEPS) 2.0 initiatives
introducing global minimum tax — all are driving change at unprecedented scale and
pace. Meanwhile downward pressure on budgets and the ongoing race for talent are
making a dicult situation even more challenging.
4 Transforming tax through integration with nance EY 2022 Global Tax Technology and Transformation Survey
The importance
of designing a
technology roadmap
linking tax and nance
1
An effective technology roadmap
will help align tax with nance and
become a driving force in business
transformation.
5EY 2022 Global Tax Technology and Transformation Survey Transforming tax through integration with nance
Companies are showing clear intent to invest in tax
technology transformation, despite the trend for budget
cuts. According to the EY 2022 Global Tax Technology
and Transformation Survey Report, 61% of organizations
say their tax department strategies are now focused on
investment in data; while 84% of organizations plan to
invest $2 million or more in tax technology, with an average
of $3.6 million planned over the coming three years.
The majority of tax and nance functions are
pursuing increased value through investment
in tax technology
Source: EY 2022 Tax Technology Transformation Survey for companies
with $10bn in revenue or more.
Tax department
strategies
Investment plans in the tax technology
by organization
Tax has always been very manual,
relying on workarounds, because
they haven't had the budget or
focus. A roadmap and vision
are critical rst steps.
Albert Lee
EY Global Tax Technology and Transformation
Leader and EY Asia-Pacic Tax Technology
and Transformation Leader
The need to invest makes sense when we examine the
current state of play. Tax departments report little usage
of many tax technologies. According to the report,
only 12% to 34% of tax functions are extensively using
advanced technologies such as automation, cloud-based
platforms, data integration tools, data visualization tools,
enterprise performance management (EPM) or corporate
performance management, fast close technologies or
workow management. This is likely down to a lack of
understanding the technology and what’s possible; the
potential cost of training and implementation; and the lack
of time or external pressure to commit to new systems.
This is going to have to change. Beyond the strategic
imperative, the fundamental changes to international
taxation introduced with the likes of BEPS 2.0 requires
processing a volume of data far beyond the scope of
existing systems. According to Albert Lee, EY Global Tax
Technology and Transformation Leader and EY Asia-Pacic
Tax Technology and Transformation Leader, “a lot of
companies just manage their tax function through basic
tools like spreadsheets and shared drives. But you won’t be
able to calculate data-intensive calculations like BEPS 2.0
on a spreadsheet in a timely manner.”
Those companies that do use more advanced systems,
for tasks including document management, workow and
collaboration, report the technology adds signicant value.
Such tools can help to get more done with fewer people,
reduce risk when it comes to audits, and achieve a single
source of truth through more sensitized data.
“Tax has always been very manual, relying on workaround,
because they haven't had the budget or focus. A roadmap
and vision are critical rst steps,” says Lee.
84% of
organizations plan to
invest US$2m or more
in tax technology
All respondents plan
to invest an average
of US$3.6m in tax
technology
61% of
organizations say
they are focused on
investment in data
Transforming tax through integration with nance EY 2022 Global Tax Technology and Transformation Survey6
Indeed, for in-house tax functions, developing a tax
technology strategy and roadmap to underpin these new
processes is a critical rst step. This roadmap should
include a robust reporting framework, linked to nance,
that ultimately spans the whole nance and tax life cycle.
Forty-four percent of survey respondents state that the
lack of a sustainable plan for data and technology is the
biggest barrier to achieving their tax and nance vision.
“A transformation roadmap is very important,” says
Lee. “A roadmap is nothing more than a game plan, and
you don’t go into anything without a plan. But what's
important with a roadmap is to make it evidence-based,
perform current state and impact assessments, and
evaluate the various options for solutions, all to support
your business case.”
And roadmaps are only becoming more important with
the advance of technology. There was a time when
implementing new enterprise resource planning (ERP)
systems typically involved planning for major builds.
The challenge then was that, by the time the arduous
process was complete, everything from regulations to
business models and the technology itself had moved on.
Modern technology now enables companies to approach
such implementations more exibly, in smaller building
blocks. But this too creates problems.
“A lot of companies will implement tools such as
automation, to try to solve a specic immediate issue,
without looking forward,” says Campbell. “Only to nd later
that it doesn't really t together with the broader picture.”
As an example, Campbell recalls being drafted in to
automate processes within a company comprising
15 different business units. Tax data was being sourced
from a range of different places, adding complexity to
essential disciplines such as transfer pricing. Campbell’s
team repeatedly asked where the data came from, and
eventually found that it all had the same point of origin.
Armed with this information, the team was able to create a
single automated system, making only minor adjustments
for each of the 15 use cases.
“This illustrates the importance of the roadmap and the
danger of not having that wider view,” says Campbell.
“The company could have ended up with 15 different
automations, and that would have been very expensive to
build and maintain. This is the biggest thing we see: a lot
of companies are missing out by simply trying to x the
immediate pain point. Look upstream and understand where
the data is coming from before you automate. That’s where
there’s a lot of missed opportunity.”
Armed with an effective technology roadmap, tax has real
potential to align with nance to become a driving force in
business transformation, showing the wider organization
how to develop an integrated ecosystem of emerging and
mature technology.
Barriers to tax and nance functions
delivering on purpose and vision
Source: EY 2022 Tax Technology Transformation Survey for companies
with $10bn in revenue or more.
Lack of sustainable plan
Inability to identify,
evaluate and respond
Inability to hire talent
Lack of budget
44%
35%
20%
1%
A lot of companies will implement tools such as automation,
to try to solve a specic immediate issue, without looking forward.
Daren R. Campbell
EY Americas Tax Technology and Transformation Leader
7EY 2022 Global Tax Technology and Transformation Survey Transforming tax through integration with nance
The case for aligning
tax and nance
2
Leveraging data to the maximum extent
means that tax and nance functions
must align for the greatest value.
8 Transforming tax through integration with nance EY 2022 Global Tax Technology and Transformation Survey
Tax is ultimately based on nancial information.
Companies pay tax based on critical data that has a
nancial foundation — whether that’s prot, or the value of
a transaction.
To achieve maximum impact with technologies such as
data analytics, machine learning, articial intelligence and
intelligent automation, that data needs to be liberated and
democratized, so it can be accessed and leveraged at all
levels, including the end user within the tax function.
These days, organizations can no longer afford to tolerate a
siloed approach to data.
“Given the volume of data requirements for tax, in terms
of process efciency, a single source of truth is now a
must,” says Lee. “It’s also a must in terms of data integrity,
supporting audits and enquiries. More and more, we see
tax authorities around the world auditing by looking into
the source systems, as opposed to doing a desk audit,
so companies don't get the chance to re-present their
information back to the tax ofce.”
To leverage data to the maximum extent, and to create
this single source of truth, organizations should consider
investing in IT architecture, such as data fabric, and next-
generation ERP systems, including SAP S/4HANA.
For tax teams unable to participate in ERP transformation,
perhaps because such a process has recently been
completed, another alternative is to harness EPM systems,
which consolidate data from different source systems and
are typically used for group nancial reporting, planning,
budgeting and forecasting. EPMs are a good option
for tax functions as they consolidate information from
different sources.
Other emerging technologies may be worthy of
consideration too. Take blockchain, which has the power to
further disintermediate and decentralize data exchanges,
ensuring that value and information changes hands at the
fastest speeds possible. The added power of blockchain
is that it can be used much more broadly to help with
the veracity of data throughout the supply chain, to
help process and track customs and duties and other
linked payments.
According to the EY 2022 Global TTT Survey Report,
84% of respondents agree that the tax function is seen
as a strategic business partner by the organization’s
owners, board and C-suite. At the same time, technology
is enabling businesses to treat data as a strategic asset. In
this environment, tax and nance, which historically have
had so much data at their ngertips, can truly embrace
this strategic role, adopting a more prominent position and
providing a wealth of data and valuable insights into the
business, at speed.
Given the volume of data
requirements for tax, in terms
of process eciency, a single source
of truth is now a must.
Albert Lee
EY Global Tax Technology and Transformation
Leader and EY Asia-Pacic Tax Technology
and Transformation Leader
9EY 2022 Global Tax Technology and Transformation Survey Transforming tax through integration with nance
Collaboration —
leveraging ERP
implementations
3
The tax needs when implementing
an ERP system is a critical part
that is often overlooked.
10 Transforming tax through integration with nance EY 2022 Global Tax Technology and Transformation Survey
When companies embark on implementing new ERP
systems, tax needs can often end up as an afterthought.
Yet EY research shows how critical it is for the tax function
to work alongside nance from the project’s inception.
Tax departments that do work with nance
overwhelmingly report that their tax data was sensitized
during the ERP implementation process. Sensitizing
data up-front enables teams to get the necessary
tax information faster, and to use that information
strategically as opposed to reactively.
Without close collaboration, both tax and nance teams
encounter high levels of inefciency and additional cost
in meeting regulatory requirements and are exposed to
greater levels of risk.
“We saw a worst-case scenario example recently, where
tax was not involved in the planning discussions at
all,” says Campbell. “Under the new ERP system, tax
actually lost some of the data it had in the old system
and was unable to report properly. There was then a big
scramble to try to gure out how tax would even get that
information. And the eventual workaround was a lot more
expensive than it would have been just to design it right to
start with.”
The latest ERP systems have added new tax-specic
capabilities, improving the quality of data as well
as processes for tax purposes, thereby allowing tax
personnel to focus more effectively on such value-added
activities as business integration and tax planning.
According to the EY 2022 Global Tax Technology and
Transformation Survey Report, more than half of
respondents that have undergone an ERP upgrade in the
last two years believe it was a success. Fifty-three percent
said they disagree with the notion that their recent ERP
upgrade has not yet delivered on expected value.
Percentage of companies looking to upgrade
their ERP systems
Source: EY 2022 Tax Technology Transformation Survey for companies
with $10bn in revenue or more.
ERP upgrades:
Planning a major ERP upgrade in the next two years
Looking to rationalize to fewer ERP instances
No recent or planned upgrades
Had a major ERP upgrade recently
38%
32%
23%
8%
46%
of
the companies have
either recently or
plan to complete a
major ERP upgrade.
With 46% of companies having recently completed or
planning for a major ERP upgrade in the next two years,
tax teams should ensure they have reserved a seat at the
ERP implementation table. If they don’t, they may nd
their reporting requirements simply are not met.
11EY 2022 Global Tax Technology and Transformation Survey Transforming tax through integration with nance
“The biggest thing is going to be for tax to communicate
with nance, so they understand each other,” says
Campbell. “We’ve held workshops with tax and nance
sitting in the same room and talking about the issues for
the rst time. I’ve seen a lot of eureka moments there.
“In one specic example, the nance team said they’d
never understood what tax was doing with the data
they were requesting. When the tax team talked about
what they needed, nance realized there was actually
another report they could give tax, that would be exactly
what they were looking for. Tax had been taking ve
different reports and consolidating them; nance was
talking about a single source of data that they’d had the
whole time.”
The prospect of a cross-functional ERP transformation
may seem daunting, in its potential complexity and cost.
If so, using an outside advisor may be an efcient and
cost-effective way to absorb the unavoidable burden in
terms of resourcing and skills, rather than pulling a full-
time tax professional off the team and needing to cover
their work for the duration of the process.
An external advisor may also offer invaluable help
advising on leading practice, and how to benchmark
against peers.
“Unless the tax function has someone who has been
through several ERP nance transformations in the past,
it’s going to be very hard to implement best practice and
be able to identify where some of the risks and challenges
are,” says Campbell. “Getting outside support gives
you the ability to temporarily add people who have the
experience of going through similar transformations,
potentially in the same industry, to provide input on
leading practice and benchmarking, and how to advocate
for tax in the appropriate way.”
12 Transforming tax through integration with nance EY 2022 Global Tax Technology and Transformation Survey
Winning the race
for talent
4
There is an increasing need to
utilize technology to meet the
demands of escalating workloads
for the tax professional.
13EY 2022 Global Tax Technology and Transformation Survey Transforming tax through integration with nance
With the increasing integration of tax and nance
activities, the continued infusion of technology, and the
difculty tax departments are now facing in nding new
recruits to meet the escalating workload, there will be a
signicant focus on ensuring companies have the right
talent and skill sets, both to enable the change and to
extract the full potential benet.
In tax alone, 95% of the companies surveyed expect
that their tax personnel will need to augment their tax
technical capabilities with data, process and technology
skills in the next three years. This is no simple task.
Companies expect their tax personnel will
need to augment tax technical skills with data,
process and technology skills
Source: EY 2022 Tax Technology Transformation Survey for companies
with $10bn in revenue or more.
Expected skills extension:
Very large extend Large extend
Moderate extend Low extend
44%
40%
11%
5%
95%
of
the companies
will augment their
tax technical skills
by atleast a
moderate extend.
“It’s unreasonable to expect the whole tax profession,
which already has a very technical job, to become experts
at technology overnight,” says Lee.
Some degree of the tech burden will be offset by the fact
that technology is being democratized. Tax professionals
can take advantage of the fact that AI and other cutting-
edge technologies are being embedded invisibly in the
tools they are expected to use, so they don’t need to be
a deep technologist to ourish in the role.
But that can only go so far. Again, there is potential
scope for outsourcing to, or co-sourcing with, a managed
service provider, who can shoulder some of the resource
burden and introduce the necessary expertise into the
tax function.
“Tax and IT each require completely different training,”
says Lee. “It’s like telling a doctor you want them to go
and be an engineer. There are some physics and chemistry
involved with both professions, but they're fundamentally
different, so it will take some retraining to crossover.
One way to bridge those challenges is to work with
external professionals.”
Campbell cites the example where EY leaders introduced
a team of data professionals to handle the initial data
ingestion, which allowed them to centralize the data,
standardize the process, and identify where automation
was possible. They could then let the tax professionals
focus on doing what they did best.
“We put that data transformation work into the
hands of professionals who are trained in data,” says
Campbell. “And we're letting the tax team focus on the
tax determinations, applying the tax law to that data.
As opposed to expecting our tax professionals to be the
data transformation expert too.”
Another key takeaway here is that, while the focus is on
data automation, skilled people still have a critical role to
play in the process. It’s a case of tax professionals working
together with the machines, rather than engaging in a
race against them. In any nance and tax transformation,
people should remain at the center.
“You need people to execute on the strategy, to create
the transformation plan and the systems, and then to
operate it,” says Lee. “It still requires judgment. And it
still requires exception management. That’s why human
resources will play a signicant role in all of these
transformation projects.”
14 Transforming tax through integration with nance EY 2022 Global Tax Technology and Transformation Survey
Steps for successful
transformation
5
Finance and tax functions must
embed agility and sustainability
into their operating model
through key steps.
15EY 2022 Global Tax Technology and Transformation Survey Transforming tax through integration with nance
With enterprise-wide transformation high on the C-suite
agenda, CFOs are eager for both tax and nance to reinvent
themselves too. They want their tax and nance functions to
analyze their operating model, and increase efciencies, do
more with less, and manage the analytics and value coming
out of their common data sets. Budget-wise, they know that
to meet these priorities, they need to invest in innovation
and technology.
EY teams’ latest research points to a much tighter coupling
between tax and nance in this transformation process,
where historically they may have been more discrete.
Finance and tax functions are well advised to embed agility
and sustainability into their operating models. Here are
some key steps to achieve that:
1. The rst task is to assess your current state against
potential future requirements and run a gap analysis.
A key part of this involves functions sitting together and
making sure that nance understands exactly what tax
needs and why.
2. The changing regulatory environment means extra work,
which necessitates using technology. Tax professionals
with the necessary skills are required, not just to handle
the volume, but to manage the heavy data requirements
alongside cutting-edge automated tools.
3. Identify which operating model best supports the
desired strategy. This could be outsourcing, hybrid
or co-sourcing, or in-house function redesign.
4. Leveraging your enterprise systems, thus building a
common, standardized data framework, the resulting
ecosystem (which EY teams refers to as the intelligent
tax and nance function) will allow ERP, EPM and other
source systems to underpin the entire nance and tax
record-to-report process.
5. Build the ecosystem incrementally. It should start with
leveraging the existing enterprise technology stack
and build your data models to support your use cases.
Together it will enable continuous improvement and
help drive long-term value for the enterprise.
16 Transforming tax through integration with nance EY 2022 Global Tax Technology and Transformation Survey
About the survey
Insights from 1,653 executives globally
EY 2022 Global Tax Technology and Transformation
Survey was conducted by Euromoney Thought Leadership
Consulting from September to November 2021. The
survey gathered insights from 1,653 executives around
the world to understand how tax and nance functions are
being affected by change. As EY teams were not identied
as the sponsor of the survey.
Participant prole:
1,653 senior tax and nance executives
12 industries 42 jurisdictions
17EY 2022 Global Tax Technology and Transformation Survey Transforming tax through integration with nance
Contacts
Albert Lee
EY Global Tax Technology
and Transformation Leader and
EY Asia-Pacic Tax Technology
and Transformation Leader
+852 9664 2630
Daren R. Campbell
EY Americas Tax Technology
and Transformation Leader
+1 202 327 6539
daren.campbell@ey.com
Sveinung Baumann-Larsen
EY EMEIA Tax Technology
and Transformation Leader
+47 982 06 202
sveinung.larsen@no.ey.com
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