Tax and Legal Services Performance Summary

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Our Tax and Legal Services line of service has made significant strides in driving profitable growth, cost discipline and efficiency.

 

 

Tax and Legal Services

“Tax and Legal Services is the differentiator that gives PwC the ability to stand out”.

James Whitaker,Tax and Legal Services Leader.

 

There is no doubt that as tax and legal professionals, we are operating in an environment that is facing an unprecedented level of disruption. In today’s market, clients are looking for well-rounded professionals who can work with them to solve complex business problems, often with a tax angle to them. It’s no longer sufficient simply to be a specialist in a particular area of tax. Our challenge is to equip our professionals with the skills and tools to live this journey with our clients and strive to create value in an increasingly complex world. In line with The New Equation, our services need to be aligned to our strategy of bringing solutions to our clients that support them in building trust in their business, whilst being aligned to their strategy, thus delivering sustained outcomes. 

This can be a complex process, often challenging our clients whilst co-creating solutions to reach those desired outcomes. It is no longer sufficient simply to create shareholder value in the short term and we need to be clear as to the many stakeholders in an organisation who will have touchpoints on any project in which we are involved. These stakeholders range from governments and other public sector stakeholders, employees, suppliers, customers, other service providers, and of course society at large. At the start of 2021, we embarked upon our Tax of Tomorrow journey. Put simply, the Tax of Tomorrow is how we execute our purpose of building trust in society and solving important problems, by delivering on The New Equation.

The Tax of Tomorrow is about creating an organisational shift in how we work, by being equipped to have deeper and more influential conversations with our clients, bringing the full force of the firm to the table, and not simply seeking to solve the tax angle. We firmly believe that as we work with other lines of service to deliver on The New Equation, Tax and Legal Services is the differentiator that gives PwC the ability to stand out.


Financial results - revenue
Financial results tax and legal services

FY20 and FY19 includes revenue of R75.9m and R96.7m respectively from a business which was disposed of.

 

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Our corporate sustainability

The Tax of Tomorrow aims to deliver on reaching net revenues of R760 million, as well as increasing the Tax and Legal Services profit to a level of 15% of the firm’s profit in South Africa. We will do this by:

  • growing and retaining our diverse key talent across Tax and Legal Services; and
  • shifting the culture and mindset to being future fit to ensure that we deliver on The New Equation.


 

Transformation of tax professionals

Shifting the culture and the mindset of our tax and legal professionals takes time, but the journey has begun! These changes are in three key pillars, each of which is about working differently. Each of these is also dependent on the others, as opposed to being mutually exclusive. We are conscious that there is a myriad of complex and dynamic legislation, and we need to be in our clients’ boardrooms to help them navigate this landscape.

The first pillar is our demand creation programme, enabling our staff to understand how new legislation may impact our clients' business decisions, whether around the impact on supply chains or the digitising of their services. We now have allocated account drivers who are responsible for ensuring that we stay close to each client’s strategy and challenge where necessary.

The second pillar is around how we ensure we are future fit, by educating ourselves, continuously learning, and developing. This is far more than being up to date on tax knowledge; it's about being able to articulate value by taking clients on the journey with us as we identify the sustained outcomes they are looking to achieve.

The third pillar is about the how.  How we deliver to our clients. We hear repeatedly that clients don’t want a fifty-page tax opinion; they simply want us to work alongside them as they transform by being a true business partner, seeing our solutions through to execution. The rolling out of our global tax tool, Engagement Center, is about delivering in a digitised way, with enhanced security as we exchange information, provide deliverables, and enable real-time updates on assignment progress.   

Environmental, Social and Governance

We are very mindful of our clients’ Environmental, Social and Governance (ESG) agendas and how we can support them as they navigate this complex area. As part of leading the way on environmental initiatives, we have set up a dedicated carbon tax team to help our clients consider the challenge of net zero and how they are impacted by the very real force of climate change. On the social side, we support our clients in understanding their impact on society, seeking to reduce inequality by closing the wage gap, and enhancing how they manage their relationships with a myriad of stakeholders. Governance has many touchpoints in tax, as we work with clients to improve their remuneration and tax reporting, and increase transparency with stakeholders as they seek to build trust with those stakeholders.

In the sixth edition of our Building Public Trust through Tax Reporting publication, we look at emerging trends in tax transparency and material topics for stakeholders by reviewing the tax disclosures of the top 100 companies listed on the Johannesburg Stock Exchange. We provide a year-on-year comparison over the last three years of tax transparency in South Africa, in areas such as tax strategy and risk management, tax numbers and performance, total tax contribution, and wider impact. In the past the focus was very much on mistrust of large multinationals. We now often look at businesses as some of the most trusted institutions. We look at every interaction, every experience, every relationship, and every outcome delivered, and how it can build trust. There is a significant shift in the role of business to build trust and deliver sustained outcomes to the benefit of all stakeholders. This shift explains the imperative for ESG strategies. It also echoes our global strategy: ‘The New Equation’, focusing on two interconnected needs that organisations will face in the coming years: building trust across a wide range of areas that are important to stakeholders and delivering sustained outcomes in an environment where the risk of disruption is more intense than ever before.

The Tax of Tomorrow is about delivering on The New Equation.  As we do so, we stay close to our firm’s continued focus on the 5+1 Reimagined strategy.

For us and our clients, quality is non-negotiable. Clients rightly expect us to work with trusted organisations and we have developed a very rigorous process to assess any potential clients to aid the decision-making process in terms of whether the potential client is aligned to our high-quality standards. Quality does not stop there; it underlines everything we do. We live by our Tax Code of Conduct, and we have established an African Tax Policy Panel to bring diverse views to the table in considering the type of work we do and to ensure complex assignments are carefully considered before being delivered to clients. We have implemented a system of reviewing the engagements of all of our Tax partners and senior staff members to ensure that we are delivering on quality. In any instance where the quality falls short of the high standard required, remedial action is taken and in serious cases, there is provision for penalties to be issued under the firm’s Accountability Framework.

We continue to sharpen our market focus as we become more client focused. In addition to appointing account drivers to each of our clients and targets, we have appointed industry leaders for financial services, consumer and industrial products, telecommunications, energy, utilities, and mining, as well as the public and education sectors.

Some tax and business solutions are quite specific to the particular industry sector and so this industry-led focus leverages our deep technical skills per industry as we work with other parts of the firm to bring value, in a manner that differentiates us from our competition. As we strive to deliver a sustainable profit, we need to be commercial and embrace change as we align our service offering to our client demands. We need to have an efficient and effective delivery mechanism in order to be proactive in taking solutions to market and leveraging our tax and legal capabilities across the African continent, delivering them seamlessly.

Digitising our business has been a significant focus area as we develop the tax professionals of the future. Our staff has been through intensive training on Power BI and Alteryx, as well as our global tax and legal digital platform, Engagement Centre. This is bringing digital transformation to life as we play our part in digitising our business across the African continent with this digital global delivery tool. The Digital Accelerator Programme launched in November 2020, and six individuals from Tax and Legal Services were selected to undergo intensive digital upskilling and training over a four-month period, and lead a strategic digital change project that would support the execution of our strategy to digitise the business.  PwC launched Women in STEM (Science, Technology, Engineering, and Mathematics) hosted by Udacity in April 2021, where two individuals from Tax and Legal Services were selected to have access to the Udacity platform for a five-month learning programme and obtain a nanodegree in either business analytics, programming for data science, intro to programming, artificial intelligence for business leaders, or data science for business leaders.

We strive to inspire our people as we roll out the different pillars of the Tax of Tomorrow and we continue to support junior staff through the South African Institute of Tax (SAIT) qualification. We have implemented our hybrid working model, allowing the flexibility that today’s staff expect, with the focus on delivery rather than presence in the traditional office. We have been promoting ethical behaviours through our newly formed Ethics and Business Conduct Tax Committee. This has supported the need to drive the right behaviour throughout our organisation and in everything we do under the banner of Speak up, Listen up and Follow up, whilst adhering to the Global Tax Code of Conduct.

We firmly believe in the importance of promoting a greater societal purpose through our actions. We do this through constructive engagement with our stakeholders including the South African Revenue Service (SARS) and National Treasury. We held our annual post-budget discussion in March 2021, with contributions from across the business and public sectors, leading to a lively debate on dealing with COVID-19 challenges on society, as well as pressure on public finances. 

We also contributed to the debate on how SARS can build further through our Taxing Times Survey report, which assessed corporate taxpayers’ perceptions of the tax system and their experiences with the organisation.

The survey covers six key areas:

  1. The audit process (for example Income Tax, Value-Added Tax, and Pay-As-You-Earn)
  2. The debt management process
  3. The Voluntary Disclosure Programme
  4. SARS’ service delivery
  5. The COVID-19 tax relief measures introduced in 2020
  6. Taxpayer behaviour

The survey aims to support constructive engagement with SARS about how it can improve public trust, efficiency, and confidence in its corporate tax administration. Survey findings will also be used to improve SARS’ stakeholder engagement experience.

 

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 Rianté Padayachee

Rianté Padayachee

Media and Communications Specialist, PwC South Africa

Tel: +27 (0) 11 797 5727

Verena Koobair

Verena Koobair

Integrated Content Lead, PwC South Africa

Tel: +27 (0) 11 797 4873

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