The tax function is an 'evolving beast'

The role of Tax and Finance executives has become increasingly complex due to the constantly changing tax environment. With the rise of real-time reporting, regulatory changes, and increased demands for transparency, companies must ensure that their tax functions are equipped to handle these challenges. 

Microsoft has recognised the importance of addressing these issues directly in the ERP, and has invested heavily in enhancing its Dynamics 365 product suite to focus on tax filing compatibility and user experience.  Microsoft partners with EY Tax to deliver end-to-end implementations of Dynamics 365, to ensure clients have both technology and tax content expertise as part of their roll-out plan. 

Common ERP transformation challenges   

Greg Hari, director of indirect tax transformation at EY, stated tax is an “evolving beast”, and each organisation will have its own nuances but there are commonalities in the challenges companies will face.  

Speaking at an Accountancy Age webinar, Hari said the biggest challenge faced by tax teams is that a lot of tax decisions are taken as part of other processes such as OTC, P2P, and RTR journeys, and not within the tax module. This makes it difficult for tax teams to ensure that all downstream reporting aspects of tax are secure and the appropriate tax sensitivities are applied.  

Hari emphasised the importance of influencing ERP stakeholders, to ensure tax requirements are factored into the design of the ERP system to avoid additional costs of implementation in the future. Additionally, he mentioned examples of tax-specific challenges faced by organisations, including those in the local government sector as he feels the Microsoft ecosystem can be a solution to these challenges.    

Recently, Hari has worked alongside Georg Glantschnig, Vice President of Dynamics 365 Finance and service-centric ERP at Microsoft, to solve these complex issues quickly, with AI supporting the underlying technology in the form of “co-pilot”.   

Glantschnig mentioned the potential use of co-pilot scenarios in ERP implementation and guiding users on routine task automation, and alerting in tax anomalies and risk.  

“How can we work these assets to make them better, and co-pilot for us is to assist humans to make better decisions, faster decisions, and really augment the business process with any kind of insights, actions, follow ups, and hopefully make employees much more productive,” he notes.  

The other version of this is “autopilot”, and this aims to automate business processes at the backend, such as accounts payable invoice automation and collection agent experiences.  

Changing tax function   

The ERP system has evolved from being the finance data house to a tool that can power more business decision-making, according to Suzi Russell-Gilford, EY’s global Microsoft tax alliance leader. 

By bringing different groups in an organization closer together through data, businesses can save time and reduce the need for duplicate reports. 

“I don’t think we had realised until the advent of more recent technology, how repetitive some of the tasks and data requests are, as between different business stakeholders in an organization. The technology we’ve got now is enabling us to see that similarity and remove all the repetitive processing.  

There are several benefits of capturing tax and financial data in real-time through the ERP system, states Russell-Gilford.  

“We’ve now got a situation where we can predict through the tax and financial analytics, which supply chain method around the world is cheaper to move a particular product from one place to another, given that a lot of that is tax and tariff-based.  

If you can run real-time analytics on your data, then just imagine the insights you can get from a business perspective around things like pricing, supply chain, and ESG reporting,” she added. 

Two key objectives for EY 

When EY and Microsoft work alongside each other, Hari said their first objective is “to make sure that everything that is available, is configured for the clients and everything is tax relevant, sitting in those other underlying upstream processes”.   

In some situations, more specific country requirements will be unavailable within the standard Dynamics 365 or standard ERP processes, so EY augments these requirements by employing local technologies or a tailored EY technology application.  

Hari said: “We have some purpose-built hosted applications that benefit from the global knowledge and content power that is behind EY, and we leverage those to make sure that our clients get access to the best of both worlds, the Microsoft stack, and EY’s technical tax know-how.”    

A second key objective once an ERP goes live, is to ensure that all the processes that have been implemented are fit for purpose, sustainable and easily managed.  

One of the big benefits of a cloud ERP, is that EY can more easily help clients manage some of the configurations and collaboratively build some of the features with them, he stated.  

 “That’s something that we historically could not have done with on-premises ERPs, it would have been quite clunky and required accesses and setup that wasn’t available. Now, we can start helping our clients manage their tax configurations remotely within the cloud, which I think is really interesting. This new way of working and collaborating between advisors and clients helps us to maintain the quality and accuracy of our solutions on the long run, in a sustainable way. 

The CFO (in partnership with EY) is conducting a survey to see if businesses are leveraging their ERPs to meet tax demands. To take part, click here