Thomson Reuters 2021 State of the Corporate Tax Department Annual Report

DALLAS, June 8, 2021 – Thomson Reuters today released the 2021 State of Corporate Tax Departments Report which shows nearly half (47%) of corporate tax departments feel under-resourced when it comes to technology implementation and talent. In addition, more than half (53%) of tax department professionals place themselves in the two least-sophisticated categories — chaotic (21%) and reactive (32%), with only about 20% considering themselves to be in the top categories of optimized or predictive.

Tech Implementation, Challenges, and Priorities

Corporate tax departments are dealing with the impact of the global pandemic at the same time as their usual business activity, which is under considerable change. Tax reform, specific tax workstreams, acquisitions, and macro-changes related to politics and the economy are typical examples of demands on tax departments which, collectively, put a strain on resources:

• 45% of tax departments plan to introduce new technology and automation to address resource gaps
• Among technology in place, tax provision has the most positive impact (48%) followed by direct tax compliance (41%)
• Tax data management (29%) and tax workflow management (26%) were most under utilized
• Speed and time savings are biggest benefits for implemented technology (27%), yet a lack of time and resources (28%) are the biggest barriers to why certain technologies are under utilized
• 36% of tax departments want tech for cost savings; 19% want better quality and accuracy; and 15% want risk reduction
• Key priorities for tax departments include tax reform (25%), followed by specific tax workstream (23%), new technology and automation (16%), and reduced tax liability (11%)

“Per our latest survey of indirect tax departments, 57% anticipate major government change, specifically around digital filing or in some cases real-time reporting,” said Sunil Pandita, President of Corporates for Thomson Reuters. “Using technologies effectively saves time, which in turn saves cost, improves time to value, and enhances morale of the team members. Our new findings show the need for tax departments to utilize smarter, cloud-based technologies and more efficient processes, while also focusing on attracting the right people.”

Tax Team Talent

Today, tax departments need tax experts and technology experts, and it’s difficult to find both in one candidate. Advanced technology skills are the single biggest skills gap within existing tax teams, and tax departments are struggling to find good tax people (19% say it’s the biggest challenge for new hires), in addition to those with specialized technology skills. It is essential for tax departments to have the resources to adequately train existing team members on the technology needed to be more efficient or turn to specialist tax technologists if the right skills cannot be found. We also found the following data around corporate tax teams:

• During the pandemic, those surveyed saw improved collaboration for 24% of tax teams and 20% within the rest of the business
• Quality of collaboration deteriorated for one in 10 within teams but doubled with rest of business (20%)
• Technology skills identified as the greatest skills gap for existing teams (21%)
• 25% are aspiring to create high performing departments whereas 17% are looking to create value for the company
• 39% believe their work has the potential to have a direct impact on society
• Over half (57%) of tax professionals are motivated by their own careers – self-development excellence and job satisfaction

Final Takeaways

Technology, when properly utilized, saves time, which in turn saves cost and increases the speed of turnaround. Tax departments with successful technology deployments also noted the reduced risk of errors, higher data accuracy and improved reporting. Better organized data also provides more control and easier compliance. Unfortunately, these benefits are all too often not realized because many tax departments lack the time, budget, and skills to effectively deploy technology.

• 69% of tax departments handle indirect tax predominantly or completely in-house
• 57% expect significant changes to government requirements, specifically real time reporting or digital filing, in the coming 1-2 years, and over 80% foresee technology and process challenges
• The most commonly challenging jurisdictions include the United States, United Kingdom, and Canada

About Thomson Reuters

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CONTACT

Denise Lam
+1-416-918-4686
denise.lam@thomsonreuters.com