Globalization and digitalization have been a savior during the hard times during this pandemic. Companies have worked hard to extract the best possible results by transforming traditional work tools, catering to new untapped markets, the latest taxation trends, and remodeling their financial functions.
Governments worldwide have also made amendments in their policies to support possible growth opportunities in businesses. The tax function is one such aspect as these play an essential role in business decision-making. Thus, this demands a greater involvement of corporate tax teams, irrespective of the industry and business size.
Businesses have now altered their working structures and policies to get the best benefits of the key trends transforming the tax function. The workforce is now diverted from the primary activities and compliance to intricate technological functions of the latest tax transformation trends.
However, few businesses that have taken up the challenge seriously have achieved the goal either by accounting outsourcing services or creating strong in-house teams. The success revolves around 6 broad trends that support businesses and should not be neglected whatsoever. Here are the insights on these trends.
Tax as a Value Addition in the Transformation Process
With the advent of digital platforms for all business operations, the tax associated with each function has been altered. Businesses now need to restructure their supply chain management tools and use various new tools to sustain.
Therefore, it becomes essential for the tax teams to modify their skill-set and suggest strategies to maximize the use of digital tools while keeping the associated costs minimal. Every transformation strategy will have an associated digital services tax which means that all the resources have to be managed wisely to keep the revenue up.
Shared service centers: The saviors
During the pandemic, businesses had to control the budget associated with departments, either keeping it static or reducing it. However, due to the trend, increased costs associated with the mutual business partnerships became a concern. In such a situation, shared service centers proved to be saviors. These allowed companies to redefine tax functions to play a strategic role in the growth.
Using the best technical tools, these sharing centers offer expertise in having in-depth knowledge of key trends transforming the tax function. As a result, domains like indirect tax, service tax, tax brackets, tax refunds are all taken care of, leading to positive outcomes for the business.
Operational transformation: Need of the Hour
Digital management of tax is demanding businesses to transform their operational functions on a broad level. Online tax reporting and business partnerships need to be supported by a well-designed model in operations.
For example, teams must understand the changing income tax brackets when they plan to move their services entirely on digital platforms. If not addressed in time, this issue could lead to a tax burden in the future, hampering the growth and goals of a business.
Setting up future goals
Since there has been a massive shift in business working and implementation, companies need to prioritize future goals. This would include data simplification as well as lowering down the costs associated with resourcing.
The decisions should consider functions like remodeling supply chain, goods and service tax, and how digitalization accounting would increase or decrease the tax associated with such functions. Tax involved in each function should be the strategic driving insight during decision making.
Outsourcing: The game-changer strategy
When businesses venture into the new digital world, they need to study the new trends in taxation. This would help them understand the emerging need and power of outsourcing. Some significant benefits of outsourcing are:
- Low-cost resourcing modules
- Better automation tools
- Enhanced productivity through shared service centres
- Data expertise and advice
Adopting advanced operational and tax systems
Companies that have quickly adapted to the changing business dynamics are already adding strategic value and growth ahead. This involves transforming operations, adapting new-generation technology and models.
For example, a considerable number of companies outsourcing have reported developing effective tax policies. The outsourcing partners take care of data recording, reporting, tax compliance, tax refund status, and data security.
In the final verdict, with the ever-changing dynamics, every business should watch lots of tax trends. Such studies would allow them to tackle the challenges of the present market and set up growth goals for tomorrow.
Redefining the business model with innovative initiatives will mark the differentiators in the future. Digitalization is the need of the hour and a pathway for tomorrow’s success only when a company acquires the right strategies.