Tax Function: a shift from cost to profit centre

6 years 3 weeks ago #256 by ThomasG

Historically, the tax function has been a separate part of the organization which operated in a solitary manner. In that position it has always functioned on the sideline of the organization. From a financial perspective, the tax function has always been regarded as a cost centre, to deliver services to the organization at minimal costs.

This is in contrast to a profit or investment centre which is measured against sales and return on investment (ROI). To make the shift from a cost, to a profit or investment centre, the fiscal department should formulate a fiscal strategy, execute effectively and clearly communicate its priorities towards other departments. By doing this, the role of the tax department changes and it becomes a business partner in the decision making process. It no longer operates as in a silo, instead it is interdisciplinary and involved with other parts of the organization, where the tax expertise offers added value for the organization.

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