Survey Shows CA Businesses Think Economy Is Improving
The Conference Board of Canada’s just released Index of Business Confidence shows that Canadian business people are feeling more positive about economic growth, bringing the first quarter total to 101.8 from last quarter’s total of 99.3. Canadian’s business confidence is finally showing an upswing after three straight seasons of declines in the index.
“Most business leaders expect their firm’s profitability to improve over the next six months, which is a marked increase from the winter survey,” said Pedro Antunes, Director, National and Provincial Forecast.
Confidence in overall economic improvement increased from 19 per cent of respondents to 43 per cent of respondents in this quarter. Only nine per cent of respondents were naysayers that predicted a worsening economy.
On an individual basis, this confidence continued with over 50 per cent of business leaders expecting future profitability and financial security for their firms, jumping from the 38 per cent of last quarter. Again, the naysayers were at a low 10 per cent.
While this belief in the times getting better is good, businesses still reported hesitation towards investing significantly into the economy due to factors such as excess capacity, weak demand, rising labour costs and high taxes. Though the percentage of businesses willing to invest 20 per cent or more has decreased by 7 per cent, this is offset by an equal number of businesses willing to invest less than 20 per cent.
Meanwhile, the federally-commended all-volunteer organisation Startup Canada is officially being launched in Ottawa tonight. Startup Canada is a national movement that is embarking on a nationwide tour to asking Canadian entrepreneurs to write the action plan for fueling Canadian business growth. While seeking feedback from the business front-lines sounds like a good start, critics fear that its lack of federal funding and guarantee of governmental implementation could make the initiative a feel-good but ineffective sop for the nation.
So far, Prime Minister Stephen Harper and Foreign Affairs Minister John Baird have expressed support for the initiative but no guarantees. Additionally, across the border President Obama has jumped on the startup bandwagon by promoting a Startup America initiative as part of his re-election campaign.
“I commend the founders of Startup Canada and the organizers of this inspired nationwide campaign,” a letter from the desk of the Prime Minister reads.
“I wish you tremendous success as you promote a stronger entrepreneurial culture in Canada.”Foreign Affairs Minister John Baird, is supporting this initiative and will be attending tonight's event.
"We look forward to working with this group going forward to help put Canadian entrepreneurs on the world stage," Baird said in a press release.
“Startup Canada welcomes the federal government’s support as we aim to identify actionable proposals and priorities for advancing entrepreneurship in Canada,” added Startup Canada co-founder Victoria Lennox.
Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.