The Indirect Tax landscape has dramatically changed these last years, new functions and careers have emerged, one of the most talked about is the Taxologist role.
Multi-nationals are increasingly becoming global, with more complex transaction flows, the risks associated with manual processes are higher especially since the legislators are putting added pressure on tax departments to implement new regulations focusing on compliance and transparency.
We hear about Tax functions transformation, tax automation is now on the agenda for the in-house tax departments and has transitioned from a nice-to-have to a must-have and a new role has emerged: The Taxologist function.
Mehrdad Talaifar, VP Professional Services at Avalara, +30 years’ industry experience supporting the design, implementation and management of global tax compliance automation and process improvement for multinational companies shares his views on this function.
Can you explain what is a Taxologist?
Mehrdad Talaifar (MT) – A ‘Taxologist’ from my perspective is a tax professional who not only is a tax subject matter expert but also has deep understanding of how business processes, financial systems, data and tax technology can impact the level of effort and accuracy of tax compliance. Today’s tax professionals must have strong tax analysis and data management as well as technology skills that allow them to analyse business processes, financial data and system functionality to identify root causes of tax compliance risks and how best to implement risk mitigation measures leveraging process improvement, data analytics and technology.
Why has the Taxologist function emerged?
MT – In my 30+ years working with tax professionals on tax compliance automation and process reengineering, I have seen a continuous merger of the tax and technology functions to a point where we now have individuals, ‘Taxologists’, who straddle both functional areas.
Until about 10 or 15 years ago, the business contribution or value of most tax professionals was measured based on their tax knowledge and abilities to analyse, interpret tax laws and manage tax compliance at an acceptable level of risk and exposure. There was a clear separation between the tax and IT functions. The tax professional had some limited technology tools available for independent analysis and compliance work, such as Microsoft Excel or Access. Otherwise, the tax professional depended on IT to provide the required reports or data for tax compliance and to implement any changes in financial systems that would support or improve tax compliance.
With the emergence of better tax technologies, more tax functionalities in financial systems and data abundance, tax professionals started to leverage these new tax technologies independently from IT within and outside the financial systems. Also, due to more emphasis on control and transparency throughout the end-to-end tax compliance process, tax and IT had to work more closely together and better understand each other’s needs and challenges. Some tax professionals with a keen interest in technology and higher technology skills emerged as intermediaries who could build the necessary bridge between tax and IT and create the role of the ‘Taxologist’.
In which context do you hear about this role?
MT – Frankly, the term ‘Taxologist’ is very new even though the role emerged about ten or so years ago. You will not hear the term frequently used in the mainstream tax and accounting media or industry. You mostly hear the term used in the tax automation community, which is a fairly small group of highly specialised and skilled individuals with deep tax and technology experience. I am confident though that over the next two or three years the term and the role of the ‘Taxologist’ will become mainstream.
What do you predict will be the future for this function?
MT – I think like any other professional position and designation, ‘Taxologist’ will soon refer to a professional position similar to a VP of Tax, Director of tax, tax compliance manager or tax analyst. The tax department in a company has traditionally been viewed as a cost centre or at best as a cost and risk mitigation team in a back-office function. Tax consultants have been just an extension of corporate tax departments due to resource constraints and need for filling gaps in skills and expertise.
With technology permeating every aspect of business and life, tax professionals have embraced and must even more so embrace technology as part of their skill sets. Understanding data creation, processing, flow, analytics and reporting are no longer optional skills but key to a successful tax career. Awareness and knowledge of available technologies to make tax compliance more accurate, efficient and effective is a must and of value to employers.
Leveraging the previously mentioned tax and technology skills the future tax professional has to use these unique skills to translate simple to complex tax compliance requirements into practical, controlled, transparent and easily maintainable solutions as an integral part of the day to day operations of global company. With these critical and valuable skills, the future tax professional, whether within a company or as an external consultant, will be sitting at the table with the C-Suite members and actively participate in developing and executing business strategies.