When it comes to tax transformation, compliance is seen as the greatest challenge among 43% of companies surveyed by Deloitte.
The company recently released results of its 2023 Tax Transformation Trends survey, a biannual effort which details sentiments from more than 300 senior global tax and finance executives.
To respond effectively to increasingly complex changes — including OECD Pillar Two requirements and the rise in indirect taxes around the world — tax departments will need both access to accurate and timely tax-related data across their company’s global operations and the ability to work with tax teams that have data management and technology expertise, Deloitte said.
Dramatic changes are putting tremendous pressure on tax departments. Despite these challenges, tax and business leaders are increasingly making use of a wide range of resources to achieve their objectives — from relying on IT and Finance to help integrate tax into the ERP systems, to gaining technology and subject matter expertise via outsourcing to third parties, said Andy Gwyther, Partner, Global Operate Leader, Deloitte Tax & Legal.
“Our research echoes what we’re hearing from our clients aiming to move their transformation efforts forward and how priorities have changed after the pandemic, and what skills they require for the future,” he noted.
Survey highlights
- Costs and efficiency are still important, but not the top priority for tax transformation efforts. Although responding to changing tax laws and regulations has moved to the top of the agenda for many tax departments, achieving greater efficiency remains an important objective.
- When asked about the priorities for their tax department over the next three to five years, 31% of respondents cited increase the efficiency/reduce the operating costs of the tax department.
- Outsourcing is a prime strategy to access technology capabilities. Outsourcing has long been recognised as a tool for increasing efficiency, but access to technology tools is now an even more important driver.
- Respondents cited access to the latest technology capabilities (54%) even more often than reduced operating costs (51%) as a major or significant benefit of outsourcing an entire activity or function in the tax department. Reduced need for capital investment in technology (45%) was also named as an important benefit.
- Tax isn’t just done in the tax department anymore. There has been a notable trend, at least since 2016, to move key tax activities outside of the tax department, either to other functions within the company or to third-party providers.
- When asked about their company’s most important strategies to achieve a lower-cost operating model, respondents most often named implementing/increasing use of shared service centers (53%), migrating activity out of the tax department to other teams within the business (48%) and third-party outsourcing (40%). All three of these strategies have increased compared to 2021 survey findings.
- Future skills requirements are giving rise to the “hybrid tax professional.”
- As tax departments reorganise and adapt to the changing legal and regulatory tax landscape, they need to develop professional teams with the new skills required, especially data management and technology expertise.
- When asked where their tax department will have the greatest need for skills over the next three to five years, respondents most often named data analytics, data-driven strategic insights, and data management (44%)—a reflection of the growing importance of data-driven decision making and increased government requirements for direct access to companies’ tax data.
