Emerging trends are reshaping the way tax functions operate, both in short-term processes and in long-term organizational strategy.
Finance and tax departments are under increasing pressure to re-evaluate existing practices in order to meet evolving business, regulatory, and stakeholder expectations. Stronger support for managers, investors, regulators, and other stakeholders is required, and this support must be underpinned by accurate financial reporting, advanced analytics, and effective risk management. A forward-looking tax strategy will no longer be the responsibility of tax teams alone; it must be a collaborative effort across finance and tax teams, playing a central role in business decision-making.
Tax Risk and Performance Measurement
Operational tax risk emerges when organizations own or trade financial assets, such as stocks or bonds, and encounter related issues, including transfer taxes, dividend taxation, and reporting requirements. Today, tax departments are mainly evaluated based on:
- Tax compliance
- Tax optimization
- Risk management effectiveness
These performance measures have wide implications for companies, as they directly affect both reputation and exposure to financial and regulatory risks.
At its core, tax risk management is about recognizing where risks may arise and making informed decisions on how best to mitigate them.
Key Features of the Tax Function of the Future
To remain effective, tomorrow’s tax departments will need to integrate:
- Strong and reliable internal controls
- Advanced automation
- Integrated data and streamlined processes
- Extended analytics capabilities
These capabilities will allow tax functions to provide real-time business support while managing risk with greater swiftness.
Strategic Choices for Tax Executives
In a rapidly shifting regulatory and business environment, tax executives face three choices when confronted with change: fight it, ignore it, or embrace it. Too often, companies fall into the first two categories, failing to see that long-term resilience requires embracing change.
Tax risks can be broadly divided into two categories:
- Specific risks:
- Transactional risk
- Operational risk
- Compliance risk
- Financial accounting risk
- Generic risks:
- Portfolio risk
- Management risk
- Reputational risk
Given increasing demands for transparency and accountability from tax authorities, companies must ensure that executive leadership and boards fully understand the organization’s tax strategy. A well-structured governance framework will assure regulators that tax matters are effectively managed.
The Changing Expertise of Tax Professionals
The connection between tax and risk management is now central to business performance. Tax risk management is no longer a standalone task; it is an integral part of corporate risk management strategy. This shift is driving a change in the skills tax professionals must possess. Beyond technical knowledge, there is an increasing demand for risk management expertise, analytical capabilities, and strategic advisory skills.
How PECB Can Help You Build Competence with ISO 31000
Globally, there is growing recognition that effective risk management is an essential component of strong tax functions. To support this, PECB provides specialized training programs designed to help professionals develop practical skills in implementing risk management processes across organizations, using ISO 31000 as a reference framework.
Through hands-on exercises and real-world applications, participants gain the knowledge and competence to perform optimal risk assessments and manage risks effectively throughout their lifecycle.
Conclusion
In an increasingly active and regulated environment, tax functions can no longer rely solely on traditional compliance and reporting. The future requires agility, transparency, and a proactive approach to risk. By incorporating risk management across all tax aspects, leveraging automation, analytics, and robust governance, organizations can transform tax from a reactive necessity into a strategic driver of resilience and growth.
Developing the right expertise is vital to this transformation. Training built on globally recognized standards such as ISO 31000 equips professionals with the practical skills to assess, manage, and mitigate risks effectively. Organizations that adopt risk management as an essential enabler of their tax functions will not only ensure compliance but also build stronger decision-making, strengthen stakeholder confidence, and position themselves for sustainable success in a complex business landscape.
About the author
Vesa Hyseni is a Senior Content and Campaigns Specialist at PECB. She is responsible for creating up-to-date content, conducting market research, and providing insights about ISO standards. For any questions, feel free to reach out to her at .
