Tax and ERP: A strategic partnership for success

Sunil Tanna: I'm joined today by my colleague Lavinia to discuss why it's critical for tax to get involved early on in an organisation's transformation programme, and also how tax can get a seat at the table. But before we come to that, Lavinia, can you give us a perspective, please, on what's happening in the broader landscape, which is really driving tax functions to transform?

Lavinia Tench: Well, there are big changes in the regulatory landscape, not least because of Pillar Two requirements, e-invoicing and e-reporting mandates that are really picking up pace. What all this means is that source data has to be right at source first time, and there's real scrutiny over that. So, for example, I've got a client who had a VAT return and a reporting submission discrepancy. The tax authority picked up on that, and that resulted in an assessment for that client. And that just demonstrates that we've got to be getting the data right at the start. Now the ways that we're seeing clients grapple with this challenge and do that data quality transformation are one or two. So first of all, ERP implementations are a really great opportunity to improve your data quality. And second of all, data warehouse implementations as well, another opportunity is to transform data.

Sunil Tanna: The other thing I'm seeing a lot of is organisations really embarking on wider finance transformation programmes, often underpinned by ERP migrations. And what should a tax leader be thinking about when embarking on a finance transformation or ERP-driven programme?

Lavinia Tench: I think there are three key things that a financial tax leader should be thinking about, first of all, mitigating tax risk throughout the transformation. Second of all, ensuring that you're maintaining compliance with tax obligations in every jurisdiction that you're operating in, and finally, setting up the processes in a way that really adds value from a tax perspective to the business. I should also note that setting up transactions in a way that the tax is automated is really critical as well, and standard practice.

Sunil Tanna: I agree, and tax functions not being involved with these programs means that there's potential risk for errors, compliance failures, and not being able to articulate the business case in the way that was set up to start the programme. So how can tax leaders really get involved with these programmes?

Lavinia Tench: There are a few things, actually. First of all, it's really important for tax leaders and tax teams to articulate the tax business case to the broader stakeholder group. Second of all, it's really important to define the global requirements early on, to make sure that any key design decisions are really grappled with and tackled as well early on, so there were no surprises in terms of budget or scope. And finally, really articulate the tax requirements in the other business processes too. For example, in the sales process, the purchase process, the master data, getting the tax requirements right in those other areas of the transformation is critical.

Sunil Tanna: Well, thanks, Lavinia, that's some good insights there. And I think for me, there's three key takeaways:

• ERPs have lots of tax functionality, and it's really important to understand how organisations requirements can be met by the ERP, or if not, if there's a gap, can be met outside by an alternative solution.
• Tax leaders having a seat at the table early on in the program. It's really, really important and then being involved at all levels.
• Defining how tax interplays with the wide organisation in terms of finance, procurement and supply chain.

Thank you very much for your insights today.