After an extended period of dealing with the impact of the global pandemic at the same time as their usual daily operations, which themselves were under considerable change, it may not be too surprising that half of corporate tax departments reported feeling under-resourced, according to a new survey.
After an extended period of dealing with the impact of the global pandemic at the same time as their usual daily operations, which themselves were under considerable change, it may not be too surprising that half of corporate tax departments reported feeling under-resourced, according to a new survey.
Corporate tax departments are facing an array of tax reform, specific tax workstreams, acquisitions, and numerous macro-changes related to politics and the economy, which collectively are placing a considerable strain on resources.
These developing challenges and the opportunities that could alleviate them were outlined in detail in Thomson Reuters just-released State of the Corporate Tax Department 2021: Transitioning to a Digital Tax Department.
Interestingly, the most common strategy in place among corporate tax departments to address the resourcing issue is technology. Indeed, the survey found that those tax departments with more technology-enabled operations are more likely to feel comfortable with their resource levels.
Technology, when it is properly utilized, saves time, which in turn saves cost and increases the speed of turnaround, allowing tax departments to better demonstrate their inherent value to their companies.
Tax departments with successful technology deployments also reported a reduced risk of errors, higher data accuracy, and improved reporting, according to the survey. And this had follow-on effects — better organized data also allows for more control and easier compliance.
You can download the State of the Corporate Tax Department 2021 report here.
Unfortunately, survey respondents also said that these benefits are all too often not realized because many tax departments lacked the time, budget resources, and skills to effectively deploy technology. In fact, advanced technology skills were the single biggest skills gap within existing tax teams, the survey showed; and tax departments today are facing a continuing struggle to find good tax people, in addition to those with technology skills.
The survey clearly demonstrated that it is essential that corporate tax departments have the resources to adequately train existing team members or, failing that, to turn to specialist tax technologists if the right skills cannot be found.
Further, most survey respondents said they feel their departments are going to face significant challenges around technology, processes, and human capital, in order to comply with emerging or changing tax rules going forward. And the metrics being used by tax departments for performance measurement focus heavily on compliance, meeting deadlines, and the quality of data — with very few metrics relating to the efficiency of the department.
Perhaps if more corporate tax departments were to measure the cost of tax operations by tracking the impact of streamlining and automating processes, there would be more data available that could demonstrate the upside potential of a more sophisticated approach to using technology. This, in turn, could be something tax departments might use to underscore their value proposition within the company and bolster their argument for additional budgetary resources to leverage new technology.
The State of the Corporate Tax Department 2021 report was compiled after Thomson Reuters’ researchers spoke to corporate tax department and indirect tax leaders in February 2021 to understand the goals they were seeking and the challenges they faced. These in-depth interviews helped researchers design a questionnaire that was distributed in March 2021. The survey received 821 high-quality responses with strong representation across the U.S., Canada, the U.K., and Mainland Europe, with a small number from the rest of the world.
