The tax strategy: A key component to Business Model Reinvention

Viewing uncertainty as a catalyst for reinventions, the 28th Annual Global CEO Survey – Sub-Saharan Africa perspective highlights how CEOs are shifting strategies for long-term resilience. Instead of clinging to conventional business models, leaders are embracing change—seeking fresh approaches to drive growth and profitability.

A key driver of this shift is Business Model Reinvention—a fundamental transformation in how companies create, deliver and capture value. Organisations must rethink core elements such as value propositions, revenue streams, customer segments and operational processes to remain competitive. Tax plays a crucial role in this transformation, influencing decisions on risk management, compliance and sustainability.  

While businesses pursue transformation initiatives, they must also navigate increasing regulatory scrutiny and compliance demands.

Tax authorities worldwide are facing mounting pressure to strengthen enforcement and maximise revenue collection. As governments grapple with economic and geopolitical challenges, many are leaning on tax authorities to close fiscal gaps. Consequently, businesses are under heightened scrutiny, facing increasingly assertive tax authorities adopting stricter compliance measures.

Our latest Global Tax Controversy and Dispute Resolution Survey reveals a significant rise in the number and size of tax audits, assessments and disputes with revenue authorities worldwide.  

Why are tax inquiries on the increase? According to the above survey many businesses believe that a contributing factor for this rise is the growing technological sophistication of tax authorities. Data analytics tools, for example, enable tax authorities to identify potential outlier cases in carefully selected cohorts of businesses. Automation tools enable authorities to work through regulatory filings and returns without tying up resources, enabling more exacting examinations of each business’s declarations. Such tools can even be used to automate the launch of an inquiry. The growing maturity of such technology supports the view of businesses expecting to see further increases in inquiry numbers in years to come. Even tax authorities lacking traditional resources may be able to leverage automation tools and other technologies to step up their levels of activity.

This trend is particularly evident in South Africa, where the South African Revenue Service (SARS) has received a substantial funding boost. The Minister of Finance, Enoch Godongwana, has allocated R3.5bn for the 2025/26 financial year, with an additional R4bn over the medium term to enhance compliance enforcement and modernisation efforts. By leveraging AI and data analytics, SARS is advancing its enforcement capabilities to curb revenue leakages and create a more data-driven tax system.

The Global Reframing Tax Survey 2025  also highlights the growing complexities businesses face in navigating tax regulations. 

As businesses engage with multiple tax jurisdictions, the need for proactive compliance, and strategic tax risk management has never been greater.

We are witnessing a once-in-a-generation wave of tax regulation and significant shifts in the global corporate tax landscape, driven by greater collaboration among international tax authorities. As a result, new legislation and compliance obligations pose a major challenge for tax executives to modernise tax systems, close loopholes and increase transparency, requiring them to adapt to an increasingly demanding and interconnected tax environment.

Key global shifts include:

• Pillar Two of the Organisation for Economic Co-operation and Development (OECD) global tax framework, which reallocates taxing rights and establishes a minimum global tax rate.
• The rise of carbon taxation, such as the EU’s Carbon Border Adjustment Mechanism (CBAM).
• Greater tax transparency requirements, including real-time reporting and expanded public disclosure obligations.
• Stricter anti-avoidance rules, evolving transfer pricing regulations and VAT reforms, reshaping global compliance expectations.

The burden of the new Pillar Two regulation is worrying for many businesses concerned that it could drive additional inquiries and disputes with tax authorities. The administrative burden for tax functions is likely to prove challenging—and there is significant potential for the regulation to drive inquiry rates higher leading to more disputes. Any complacency at this stage would be misplaced.

As part of the global push for responsible business conduct, businesses are under increasing scrutiny to disclose their tax contributions and sustainability efforts. Tax leaders are playing a crucial role in aligning tax planning with sustainability objectives. Governments worldwide are introducing carbon taxes, green incentives and sustainability-linked tax policies, requiring businesses to integrate sustainability considerations into their tax frameworks. Additionally, tax transparency requirements are reshaping compliance expectations, making proactive tax planning essential.

As global tax regulations become increasingly complex and enforcement efforts intensify, businesses are prioritising proactive risk management and robust tax governance frameworks to mitigate tax-related risks. Companies are moving beyond reactive compliance approaches and implementing forward-looking strategies to anticipate tax challenges before they escalate.

Today’s rapidly changing tax landscape is prompting executives to look at how tax is managed in their business and how the tax strategy aligns with the commercial goals of their organisation. 

Any kind of strategic transformation, new way of working or new revenue stream comes with tax implications. However, while tax is expected to play a strategic role, many tax functions remain stretched to capacity, overwhelmed by complex compliance requirements, resource constraints and an influx of data. In their current form, many tax functions are unable to fully realise their transformative potential.

Without robust governance and oversight, tax remains merely a compliance function, remaining reactive, with little time or resources for strategic insights and value creation. 

Effective tax governance requires:

• Integrated oversight by the board, ensuring tax aligns with the company’s strategic objectives.
• A well-defined tax strategy, with a defined risk appetite, entrenched in key tax principles.
• Clear ownership of tax risks across all lines of defence.
• Embedded and efficient tax controls and monitoring.
• Transparent real time reporting.

Technology and additional resources alone will not rescue tax leaders from continuously fighting fires. Instead, organisations must cultivate a responsible business environment, prioritising ethical behaviour and sustainable tax practices. A well-governed tax function enhances risk management, improves transparency and strengthens sustainability metrics.

Establishing governance over tax may seem simple and straight forward, however the real challenge lies in increasing awareness of tax risk throughout the organisation, in all departments, divisions, support functions, product and service lines, locations etc. Tax risk and potential exposure can emerge in any business area, which creates a problem in the tax function lacks visibility of the risk, or a comprehensive view of operations and business decisions taken. Therefore, a culture of tax risk awareness should permeate throughout the entire organisation and open channels of communication should be established to allow for collaboration.

Although climate change might not be the primary threat according to investors this year, it still remains a key focus for them. Investors' willingness to invest in such companies likely hinges on whether they can convincingly show that their climate initiatives will lead to tangible value creation.

The tax landscape is evolving at an unprecedented pace, and organisations that fail to modernise their tax functions risk falling behind. By taking a proactive approach—leveraging governance, technology and sustainability-driven tax strategies—businesses can transform tax from a compliance burden into a strategic enabler of growth. Tax leaders are strategic advisors in business reinvention, playing a crucial role in shaping strategies to drive long-term value. 

The earlier and more decisively you act, the more the tax function can provide a clear direction and a strategic framework to make sure it works with the company's main goals. As companies undergo digital transformation, global expansion and operational restructuring, tax executives are playing a crucial role in shaping these strategies to drive long-term value.

Please contact one of our specialists to find out more about how we can help you elevate your tax governance framework and align your tax strategy with your broader business transformation goals.