Top Three Challenges for Tax Departments
How are tax organisations evolving, and what do tax folks see as their major challenges?
A new survey of more 300 U.S.-based tax professionals offers some insights.
If you guessed that shouldering the overall compliance burden would be the top challenge tax departments face, you’re close – but that came in second in a Bloomberg Tax survey. The award for the top challenge goes to … (dramatic pause) … legislative tracking/tax reform/staying up-to-date on changes. In third place, trailing these two by about 10 percentage points: management of tax data (collection, processing, etc.).
It’s perhaps not surprising that companies are worried about keeping up with tax rule changes, given two more findings of the report: tax-related risks are growing, and tax authorities are getting more aggressive. Nearly two-thirds (63%) of survey respondents reported that their company is somewhat more, or much more, exposed to tax-related risk than it was five years ago. And nearly three-quarters (74%) think their company will face more aggressive enforcement from tax authorities in the next couple of years.
In addition to the discussion of what’s keeping tax directors up at night, the report looks at how the role of the tax function, and tax leaders, is evolving. Tax planning is growing in strategic importance; it’s now the top mandate for the tax department. Forty-four percent of participants said their tax department will primarily seek to improve tax planning and/or tax-related decision support in the next two years.
Traditional tax executive attributes – leadership/managerial abilities, sophisticated tax planning and financial reporting skills – will continue to be important in the next two years. Interestingly, the report notes two qualities which respondents see as growing in importance: proficiency in technology systems for finance and tax, and proficiency in data analytics/modelling.
There’s more in the report to interest tax leaders navigating today’s complex legislative, economic, geopolitical and technological environments. In this post, Vertex VP of Tax Research Bernadette Pinamont analyses survey results and how a lack of modern technology impacts the tax function.
Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.
Explore more resources from our industry influencers:
Sign Up For Our Newsletter
Explore Our Solutions
Discover how our technology solutions and software can help you streamline tax, stay compliant, and grow your business.Browse All Solutions