Does centralisation drive a better result?

These form the cornerstone of centralised tax operations. In a centralised model, the mandate, roles and responsibilities are clearly defined, communicated and streamlined across the organisation. This structure ensures that all team members understand their specific duties, improving accountability and efficiency. With a unified approach, redundant processes are eliminated and resources are allocated more effectively, reducing the likelihood of errors and inconsistencies. Centralisation also enables better coordination and communication across functions, aligning all teams with the organisation’s overall tax strategy. In contrast, decentralised or local tax operations may lead to miscommunication, duplicated efforts and a lack of cohesive strategy and priorities, ultimately hindering operational efficiency.

Centralised tax operations enable a uniform approach to tax compliance across jurisdictions. Policies, procedures, guidelines and reporting standards are consistently applied, reducing the risk of errors and discrepancies. This uniformity improves the accuracy and reliability of tax data, which is not only essential for regulatory compliance but also enhances transparency in business decision-making.

Consistent and centralised use of technology in finance and tax functions can lead to lower operational costs, higher quality outcomes and improved transparency. By consolidating local tax functions, MNEs can eliminate duplication, reduce risk, increase consistency and enhance quality. Many MNEs rely on local resources for processes such as Procure to Pay (P2P) or Record to Report (R2R) as part of local tax compliance delivery—even though those teams may not have the necessary tax expertise.

Centralisation improves control over execution of tax strategy and the performance of compliance activities. A standardised approach supports a lean tax control framework, where identified risks can be addressed through defined controls. In response to economic changes or new regulations, this model allows for quicker decision-making, more agile change management (across people, processes and technology), and more effective risk mitigation—both financially and operationally.

The more decentralised an MNE is, the harder it becomes to ensure that critical information reaches local teams in a timely and consistent way. A centralised tax team improves communication and coordination between departments and regions. It also reduces the effort required to implement legislative updates, process changes or IT system upgrades. As a result, the organisation is better aligned to the overarching tax strategy and can ensure all teams are working towards common goals.

Centralised tax operations support the development of a Centre of Excellence by bringing together experts from different regions, creating a collaborative environment for sharing insights, best practices, and specialised knowledge. By consolidating expertise, tailored solutions and strategies can be adapted and applied across multiple territories, ensuring consistency and efficiency in addressing tax challenges globally. This approach not only improves compliance but also fosters innovation in tax management through the effective use of expertise.

If centralised tax operations are not well designed, they may lack the agility needed to respond to local market requirements and regulatory changes. It is essential to assess whether the central tax team can manage local tax issues effectively, or whether local presence is needed to navigate specific nuances and adapt quickly to new or exceptional requirements. A purely centralised model may also slow down response times or lead to missed opportunities for local optimisation due to limited on-the-ground knowledge. A global knowledge management solution could mitigate challenge.

While standardisation has clear benefits, it can also become a constraint. Over-standardised processes may not accommodate regional differences or unique local needs. To avoid this, centralised frameworks should be designed around a global baseline, with modular add-ons to reflect specific local requirements. Embedding this flexibility into workflows allows MNEs to maintain global consistency while addressing regional variations and optimising local tax strategies.

Centralised operations can lead to decision-making or implementation bottlenecks. When key activities are concentrated in a single location, information flow and approval processes may become congested, slowing down delivery—particularly in fast-paced or dynamic environments. That said, bottlenecks can also occur in decentralised models where local CFOs or approvers are overloaded. The key is to design compliance processes with clear timelines, defined roles and backup approval routes to ensure continuity and avoid delays.

A heavy reliance on central teams can create vulnerability if key personnel leave. However, this risk is equally relevant in decentralised models, where local expertise is often even more critical. When key staff move on, organisations may need to temporarily outsource to maintain compliance. To build resilience, it’s important to design a sustainable model that includes backup support and knowledge sharing. Technology plays a vital role here—automating compliance tasks, standardising workflows and using dedicated tools or AI can reduce dependency on individual experts and increase operational stability.

Transitioning to a centralised tax model requires a cultural and operational shift—especially for local CFOs and compliance professionals who are used to owning regional responsibilities. This can lead to resistance or hesitation if not managed carefully. Successful change management hinges on clear communication, early engagement, training and support. Involving local teams in the transition and showing how centralisation adds value can foster collaboration and improve adoption. Addressing concerns proactively makes implementation smoother and helps build long-term buy-in.