At-a-glance highlights for tax leaders in the consumer and retail sector

KPMG perspective:

Tax functions embrace forward-thinking approach to prepare for ESG, data and tax regulatory demands

Survey responses from tax leaders in the consumer and retail sector present a vivid image of an industry facing significant change, with organizations across diverse segments focused on creating demand and managing prices in a mixed economy and inflationary environment. From lower-margin products to luxury goods, companies are striving to better leverage data, both to optimize supply chains and to precisely identify and respond to consumer expectations.

Survey findings highlight a strong awareness among tax leaders that they must adapt their resourcing models, particularly to recruit and develop new workforce skillsets. For instance, with the approaching implementation of BEPS Pillars 1 and 2, tax functions must prepare for added reporting and compliance complexity. And, with the trend of major consumer product companies forming alliances and ‘marketplaces,’ they must address intricate tax considerations. Similarly, with ESG exerting a growing impact on shopper preferences, tax functions must ensure that their tax models and behaviors are sustainable and help safeguard their brands, particularly as voluntary tax reporting becomes mandatory. Also, with the current shift to real-time tax authority reporting, including digital indirect tax initiatives in many jurisdictions, organizations must gain the skills to manage tax data effectively and build the right controls and risk management processes.

With so much change taking place, the survey found that tax leaders are attuned to technology transformation to bolster both efficiency and data quality. While they are looking closely at myriad specialized technology solutions, and the advent of generative AI to automate many processes, survey participants acknowledged the challenge of improving data usability and accessibility, particularly in the face of enormous transaction volumes.

All of this suggests the need for corporate tax functions to evolve from a historically ‘reactive’ stance to more forward-thinking activities, to work with the business on corporate strategy and identify emerging tax implications. Such a future-focused mindset can also help them better manage their many statutory purposes and take advantage of more ‘composite’ technology solutions, rather than building multiple bespoke systems. They may also leverage enterprise-wide systems that are in-development or undergoing upgrades if they align with group technology and business teams and come to the development table early to collaborate on these initiatives. Overall, it is encouraging that tax leaders in the sector are alert to the need to enhance their people, process and technology capabilities, in the near term, to respond effectively.

Matthew Whipp
EMA Consumer & Retail Tax Lead, KPMG in the UK