As the adage goes, “Change is the only constant.”
As other executives within organizations are driving new investments in digital capabilities to identify and unlock new sources of value across the business, tax executives should be paying very close attention to how those investments are being structured - the types of assets being developed, how, by whom, and where they are being developed, and how they are being monetized. All of these changing value drivers mean disruption for your existing value chain and tax model.
Starting at the start - analyzing your value chain
Most businesses have not started or have only just begun to assess the implications of digital transformation for their transfer pricing models and tax structures. Many businesses have significant risk embedded in their current tax operating models around digital, and much of that risk currently remains unknown to them. And a few early movers are already ahead of the pack having focused on identifying and understanding how digital transformation affects their end-to-end value chain and engaging affirmatively to capture significant benefits by aligning their tax structure to the new digital value drivers within their organizations.