Tax Technology Spending Expected to Surge

How does your tax compliance capability stack up?

One way to address this question is by assessing your organization’s tax compliance risks. Benchmarking marks another way to get some useful answers, and the 2025 BDO Tax Strategist Survey can help on this count. The report’s findings are based on responses from 300 senior tax leaders from companies with annual revenues ranging from $250 million to $3 billion.

As Michael Bernard, Vertex’s Chief Tax Officer, notes, the BDO survey features promising news regarding tax leaders’ participation in strategic decision-making activities. The report also sheds light on tax technology stacks: more than two-thirds of tax leaders expect to increase their technology spending during the coming year. These investment plans are sizeable – nearly half of survey respondents expect to increase their tax technology spending by 10-20% while 7% of respondents plan to boost tech investments by more than 20%. Notably, only 4% of tax leaders anticipate spending less on tax automation in the next 12 months. 

The report focuses on two other aspects of tax technology that warrant consideration: the types of tax technology applications currently in use and how tax groups are deploying artificial intelligence (AI) functionalities and solutions. Tax teams are using the following solutions right now:

• Tax reporting software (identified by 52% of respondents)
• AI (48%)
• Data management system/data warehouse (44%)
• Tax/accounting software related to digital assets (44%)
• Data analytics/visualization/predictive modeling (44%)
• Enterprise resource planning software (38%) and
• Robotic process automation (26%) 

While some tax groups have deployed a broad range of tax technology solutions, a substantial portion (close to half in many cases) do not have essential tax technology solutions (like tax reporting software) in place. The survey report suggests that the lack of a strong data foundation is a primary cause of this gap. 

Technology modernization is a good way to strengthen the tax data foundation. As I’ve noted, software modernization helps get tax compliance and planning capabilities “future ready.” This can mean responding to ongoing rules and rates volatility, satisfying new e-invoicing compliance requirements, or integrating advanced technologies, like Generative AI, into your tax technology stack. 

Speaking of AI, survey respondents indicate that they are most often using AI to:

• Generate summaries of complex tax concepts or regulations for internal executive review (50% of respondents)
• Highlight trends or patterns in data closer to real time to improve reporting and planning (49%)
• Automate tax compliance and reporting tasks (46%)
• Proactively identify and report on potential areas of tax risk (45%)
• Integrate with other technology and automation platforms (42%)
• Facilitate the ability to query the organization's data more directly across functions (38%)

This willingness to experiment with AI functionalities and applications is good news, given that AI can help refocus indirect tax professionals on higher-value activities. “The additional levels of automation and optimization AI delivers further reduce how much time tax groups need to spend on manual, repetitive activities,” notes Marc Duclos, Vertex’s Global Senior Director of Strategic Partnerships.

As tax leaders and their teams increase their investments in AI and the rest of their tax technology stacks, they can consider performing the tax technology adoption practices that the BDO report identifies:

• Implementing training to upskill current employees
• Developing a formal change management strategy
• Working with an external consultancy/advisory firm
• Working with the organization’s enterprise digital transformation team
• Establishing an internal user-enablement team

PLEASE REMEMBER THAT THE VERTEX BLOG 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. THE VIEWS AND OPINIONS EXPRESSED IN THE VERTEX BLOG ARE THOSE OF THE AUTHORS AND DO NOT NECESSARILY REFLECT THE OFFICIAL POLICY, POSITION, OR OPINION OF VERTEX INC. ⁠