Modernising tax and finance functions to help organisations thrive in a turbulent economic environment is a years-long trend that EY has been following in its EY Tax and Finance Operations Survey (TFO).
The latest survey found that 96% of businesses globally (95% in South-East Asia) say they are transforming their tax operating model. Data-powered operations that deliver insights to help direct the wider enterprise is a key incentive to transformation in a rapidly changing regulatory landscape.
Many large global businesses are braced for sweeping reforms as governments implement the OECD/G20 base erosion and profit shifting (BEPS) 2.0 rules, including global minimum taxes under Pillar Two. The survey finds that 90% of global respondents (94% in South-East Asia) expect to experience a ‘significant’ or ‘moderate’ impact from BEPS 2.0, but only 30% (17% in South-East Asia) have completed a BEPS impact assessment.
Elaine Yeo, tax and finance operate leader at EY Asean, observes that organisations in South-East Asia are still adopting a ‘wait-and-see’ approach toward BEPS 2.0, given the fluidity of the rules.
‘While there may be complexities in the BEPS rules and administration of it, companies need to focus on operational readiness and get ready soon,’ she says. ‘Local tax authorities are also introducing new initiatives like e-invoicing, which can mean more strain on tax and financial resources. Companies need to adjust their people and processes, and prioritise their BEPS 2.0 implementation to comply with regulatory requirements.’
Co-sourcing with third parties is emerging as a preferred way to create modern, agile tax operating models. Globally, 95% of businesses (92% in South-East Asia) are now more likely than not to co-source tax and finance activities.
Meanwhile, 35% of companies globally (39% in South-East Asia) believe that co-sourcing with a provider who has significant capabilities in data, technology and shared service centre delivery is the most important change they need to make to their operating model.
More than half (59%) of global respondents (67% in South-East Asia) say that the ability to develop their team and provide opportunities to work on more strategic activities is the most significant benefit of partnering with a provider to co-source multi-country tax compliance and statutory reporting activities, while 18% of global respondents (9% in South-East Asia) identify cost savings as the biggest benefit.
The rapid pace of legislative and regulatory change coupled with the need to keep updated with technological advances have, along with budget constraints, impacted hiring and retention strategies for organisations.
Almost two-thirds (63%) of global respondents (74% in South-East Asia) say that their employees will need to augment their tax technical skills with new data, processes and technology abilities in the next three years. Meanwhile, globally 29% (36% in South-East Asia) say they that don’t have enough highly skilled professionals capable of monitoring, evaluating and implementing tax legislative and regulatory change around the world.
Crucially, over half of respondents highlight mental wellbeing as a concern as organisations seek to address workplace fatigue and motivation.