Practical solutions for tax compliance

Jochen Richner
Director, Tax Technology Leader, PwC Schweiz

The tax functions of many internationally active groups are organised in a decentralised manner, giving the country subsidiaries a great deal of autonomy. This often results in the head office having only limited information about the local tax processes. But why is this important at all – and how can it be changed?

New challenges?

Perhaps not everything was better in the past, but many things were different. A decentralised control function, for example, often made sense. Local country organisations bore a lot of responsibility themselves; the distances were short. But structures like this are increasingly reaching their limits, mainly because:

data needs to be reconciled between different reports and files across the entire Group or even the entire supply chain;
documents must be available centrally, e.g. in the case of M&A activities;
different stakeholders demand active and coordinated management of risks;
global tax initiatives like BEPS 2.0/Pillar 2 require an aggregated or consolidated view.

As a result, there’s no getting around a stronger role for the central tax function – at least in terms of a ‘monitoring’ role. But what exactly are the opportunities in practice?

New solutions!

Basically, there are two different approaches:

Outsourcing, i.e. the relevant work is outsourced to an external provider. On the one hand, it’s beneficial to outsource regionally or even globally to one provider for several subject areas (such as corporate income tax and accounting), in order to harness synergies at both data and process level. Modern services like Connected Tax Compliance from PwC involve the use of a digital platform to make collaboration efficient and consistent.
Insourcing, i.e. the work is done in-house by the company’s own employees (or with local providers, if necessary). With this approach, experience has shown that a central platform for process monitoring and document storage is important for maintaining an overview. PwC offers Smart Business Insight Suite as a user-friendly and practical solution for insourcing.

It’s also important to have and maintain a complete overview in the area of VAT compliance. With the support of EDGE, this can be implemented as an outsourcing or insourcing solution. Having a regional and/or global overview means that compliance requirements are easier to meet, cost savings can be achieved and planning ability can be significantly enhanced.

New solutions!

It doesn’t matter whether you insource or outsource: compliance is a central task of the tax function and must at least be monitored by the Group head office. The right partner – and the right software – can help with this.

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