6 Fearless Forecasts for Tax Operations of the Near Future

How is the role of tax departments changing, and how can tax add more value as a business partner? A recent Deloitte report asks – and answers – those pressing questions. The firm’s insights and analysis are based on survey responses from 300-plus business, tax and finance leaders from around the world.

The report offers up six insights on what the next couple of years hold for tax:

1. The drive for tax to add more strategic value should be accelerated. As businesses continue to develop new digital products and channels, they will be looking to tax for guidance in navigating uncharted territory. 65% of tax leaders surveyed said that a deeper advisory support will be needed on digital business models, and around one-half said the same for supply chain restructuring and sustainability.
2. The last two years have been a watershed for transforming tax compliance and tax-team resourcing models. 93% of survey respondents expect tax budgets to plateau or decline. Companies are moving compliance and reporting to shared service centers in the finance department, or to outsourcing providers. However, the popularity of indirect taxes among jurisdictions means that companies will continue to need internal expertise in this area.
3. The rapid shift towards digital tax administration is adding further urgency to operational transformation. Requirements such as electronic filing and real-time reporting are pushing tax departments to modernize at a faster pace. Nine in ten respondents say this will have an impact on tax operations and resources in the next five years.
4. Tax leaders are prioritizing data simplification and lower-cost resourcing as a foundation for their future vision. These strategies must be prioritized in order for tax to deliver a higher value to the business, according to the report, given that they top the transformational agenda over the next two years.
5. CFOs are beating the outsourcing drum the loudest. Outsourcing was seen as the most important strategy for lower-cost sourcing by 44% of C-suite respondents (which comprised mostly CFOs), ahead of deeper automation (39%) and shared service centers (31%).
6. Those most advanced on their operational transformation journey already are adding more strategic value. Tax organizations that described their company as “advanced” in introducing next-gen ERP systems were more likely to describe the tax function as “highly effective in supporting the business.”