Operations redesign is important to recover from the crisis
The field of taxes is the most targeted in general and even more so in times of crisis. Taking action at the government level can block or dislodge blockages in the business environment. But at the company level, top managers need to reshape operations to prepare the organization for a comeback.
The importance of operational restructuring
Operational restructuring presents clear opportunities to integrate fiscal structures into the company’s operational activity. Transfer pricing should be a key element in achieving new operational business objectives. Tax planning strategies that influence the location of activities can also create opportunities.
Preparing a company’s tax approach and strategy is essential, especially now that tax systems are at the heart of economic aid measures. Whether it is a matter of postponing the time limits for filing and paying income taxes and indirect taxes, or whether it is a question of filing qualifications for wider measures to exempt from the payment of certain taxes, all these measures are designed to provide a lifeline for companies to get through this unprecedented crisis.
However, they can only be useful if organizations have an overview of their operations in order to apply for the most appropriate type of aid and capitalize on it for the benefit of return.
The strategies and tax treatments
Applying various tax treatments requires an investment of time and effort. For example, to address the issue of transfer pricing, a company needs to be aware of the factors that bring added value and the economic contributions that the group’s affiliates make, including how these factors differentiate the company from its main market competitors. That is why it is useful to work with a consulting company to cover these needs.
The speed with which fiscal stimulus measures were adopted in response to COVID-19 reminds us once again how quickly the fiscal landscape can change. And as much of the legislation to urgently stimulate economic recovery is based on fiscal mechanisms, it is likely that legislation in this area will continue to be fluid.
In addition, the pressure to keep up with digital transformation and technology is relentless – and costly – at a time when many companies are under cost pressure as part of their own financial recovery plans from the economic shock of the pandemic.
The role of the fiscal and financial functions
As companies stabilize, fiscal and financial functions will be required to play an even stronger role in helping companies determine the next steps in their recovery plan. Transforming the operating model can help reduce overheads, control the unpredictable costs of digitization, and redirect internal resources to more strategic activities. It can redirect investment in the people and technologies so necessary to keep up with a constantly changing world.
To re-evaluate their operating model, companies would do well to:
- Examine its current fiscal and financial operating model and set the organization’s priorities in terms of cost control, value creation and risk management, in order to understand how the fiscal and financial function contributes to the overall business strategy. Once these priorities are clear, it is easier to identify the dysfunctions between people, processes and technology and to make the decision on the sustainability of the current model.
- Determine what skills to develop. Maintaining tax and financial activities internally generally requires a certain degree of internal transformation to train existing people, optimize general tax processes and technology. But decision-makers need to be sure they can do it efficiently and with control. Other routine tasks can be better accomplished using a state-of-the-art technology platform owned by a competent service provider.
- Find the right mix of tactics. Many companies will decide that a hybrid approach is right for them, where they decide to continue to hold certain tax and financial functions that they consider critical, while providing third-party partnerships with others. The right hybrid approach can improve both effectiveness and efficiency, while giving their people time to focus on activities that increase profitability.
For companies that have integrated the contribution of the fiscal planning function into their operating model, reducing the time for routine activities and reallocating it to find strategies aimed at broader strategies will be even more important during the post-pandemic recovery.
Florentina Șușnea este Managing Partner în cadrul companiei PKF Finconta. Experiența ei profesională de peste 26 de ani cuprinde domeniile de audit statutar și IFRS, consultanță fiscală, probleme de rezidență fiscală, restructurare financiară și fiscală, documentație și politici de Transfer Pricing, fuziuni și divizări, M&A, expertize judiciare, contabile și fiscale, due diligence de achiziții. Florentina este membru acreditat al următoarelor organizații profesionale: Camera Consultantilor Fiscali, Camera Auditorilor Financiari din România, Camera Expertilor și Contabililor Autorizați din România si Association of Certified Anti-Money Laundering Specialists. A absolvit Facultatea Finanțe-Contabilitate din cadrul Academiei de Studii Economice, București, Facultatea de Drept din cadrul Universității ”Titu Maiorescu”, programul MBA de la Tiffin University din SUA, este doctor în economie și a urmat numeroase cursuri naționale și internaționale în domeniul fiscal. florentina.susnea@pkffinconta.ro
