Why tax needs a control framework

The tax world is changing fast, and with new regulations demanding more complex reporting than ever before, organisations can no longer treat tax as a compliance formality. Pillar Two imposes a global minimum tax on multinational businesses with an annual revenue over €750 million and has stringent requirements that are more than a new set of rules; they’re a game-changing play that exposes a serious gap in how tax is managed. Relying on siloed processes, spreadsheets, and informal workflows is a risky game when it comes to the complexities of this new regulation. 

 

From a CFO perspective, this also poses a direct risk to the accuracy of financial statements, particularly around effective tax rate (ETR) reporting and tax provisions, which can undermine investor confidence if not managed properly.

 

Yet, according to research from Tax Systems, just 12% of tax and finance professionals feel confident about meeting Pillar Two requirements by 2026, and 43% still expect Excel to play a role. Perhaps most telling of all, 62% say their biggest challenge is simply understanding the rules.

 

In order to manage Pillar Two and other tax compliance mandates successfully and efficiently, businesses need a more structured, connected tax process. This is where the tax control framework comes into play.

 

 

Unifying departments  

Instead of scrambling to react to new regulations, Pillar Two provides a chance to rethink tax strategy and optimise both local and global reporting processes. A tax control framework helps connect the dots between teams, systems, and responsibilities from across the business. Too often, the tax department works in isolation, even from the wider finance function, but the unification of these departments and the wider business will help turn tax into something more integrated, reliable, and strategic.

 

A strong framework is more than a box-ticking exercise. Adding real value to the business, it will improve the quality of financial data and strengthen governance. This matters, especially when tax reporting must now tie directly to consolidated financials and support defensible positions across multiple jurisdictions. Quantifying its value is important: companies can reduce audit adjustments, accelerate the financial close process, and deliver clearer insights to leadership when tax is embedded into internal control systems.

 

By having the three crucial factors – people, processes, and technology – at the heart of a tax control framework, tax matters can be managed efficiently and consistently across all relevant territories, and deliver enhanced tax transparency for both internal and external stakeholders:  

 

1.      Getting people aligned  

Building a framework isn’t just about business structure; it also requires consolidation between individual team members. There are human beings behind each process, making decisions, reviewing inputs, and signing off reports. But, too often, there is confusion over who owns what, opening a gap for mistakes to creep in or tasks to fall through the cracks. To avoid this, businesses need clear roles and accountability. This clarity prevents duplication, cuts delays and helps people focus on what really matters. 

 

A robust RACI (Responsible, Accountable, Consulted, and Informed) model is a simple but powerful way to redefine and document roles and responsibilities. This can minimise confusion and help teams understand where their responsibilities lie and what is needed from them to meet the necessary requirements. 

 

2.      Making processes easier

Once the right people are in the right place, the next step is to standardise how work gets done. That means building clear, repeatable processes across the tax lifecycle from data collection to reconciliation, review, and reporting. These checkpoints help prevent and catch mistakes before a company risks compliance failure. 

 

Far too many organisations still rely on reactive, manual ways of working. These methods are prone to human mistakes, and in the context of Pillar Two, where timing and accuracy are critical, this kind of approach remains ineffective.

 

Structured processes reduce the risk of errors, create consistency across borders, and help teams respond to change. By embedding RACI models into these workflows, businesses can ensure nothing is missed and every step has an owner responsible for its completion.

 

3.      Using technology to do the heavy lifting

Technology brings all this together. With the right tools, organisations can automate data collection, streamline reviews, and ensure traceability in every calculation. This eases the burden on tax professionals and can speed up time-sensitive processes. 

 

For CFOs, the return on investment is twofold: lowering compliance costs by reducing manual work, and strengthening SOX/ICFR compliance by ensuring an auditable, consistent process across jurisdictions.

 

Instead of manually gathering data from different regions and stitching it together in Excel, teams can use cloud technology to upload and verify information in one place. This makes it easier to review data, spot anomalies and re-use validated data across different tax processes.

 

It also supports the automated production of GloBE Information Returns and other required filings. With up to 60% of Pillar Two requirements coming from the tax provision, automation helps remove bottlenecks and prevents duplicated effort.

 

Yet the reliance on spreadsheets remains high. With 43% of professionals still planning to use Excel, there is a clear need for a mindset shift. Spreadsheets might offer ease and familiarity, but they cannot offer the controls, audit trail or integration that technology platforms can. This opens companies up to compliance errors, which can be costly to put right, especially in multi-jurisdictional environments. 

 

 

Bigger than compliance

The reality is that most organisations are not ready for Pillar Two. The ones that will succeed are those who take this moment seriously and start laying the groundwork now.

 

That means moving away from disjointed tax processes and toward a framework built on clarity, consistency and control. It means investing in people, standardising processes and deploying the right technology to support it all.

 

The benefits of a tax control framework exceed meeting new rules. When properly implemented, it helps improve the overall health of financial reporting, brings tax and finance teams into closer alignment, supports better forecasting and improves decision-making across the board. 

 

Beyond compliance, CFOs view this framework as enhancing investor confidence, supporting capital market messaging, and demonstrating sound governance practices to external stakeholders.

 

In short, it means treating tax as part of the strategic core of the business, not just an obligation at year-end. Those who do will not only be ready for Pillar Two, but they will be better equipped for whatever the future of tax throws their way. 

 

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Hank Moonen is Chief Strategist - Global Tax Solutions at Tax Systems   

 

Main image courtesy of iStockPhoto.com and georgeclerk