Tech Industry CFOs Identify Their 2023 Tax Priorities

Vertex Inc.

It pays handsomely to include tax leaders in the strategic decision-making process.

That insight is one of the most compelling findings – at least from a tax perspective -- in the 2023 BDO Technology CFO Outlook Survey report. BDO polled 100 tech industry finance chiefs on their upcoming expectations and concerns related to numerous areas, including tax. 

Sixty-two percent of overall survey respondents report that tax leaders are regularly invited to weigh in on business decisions before they’re made. However, there are pronounced differences in how finance chief in high-performing companies describe their tax leader’s involvement in business decision-making compared to how CFOs in lower-performing organizations describe tax’s involvement:

  • Among companies BDO describes as “outperformers,” 69% of CFOs indicate that tax leaders regularly weigh in on business decisions before they’re made; and
  • Among technology companies whose profitability declined in the past year, only 36% of CFOs have a seat at the business decision-making table.

This correlation strongly suggests that there is significant value in identifying and understanding the tax implications of potential business decisions. One of the report’s key recommendations emphasizes this point: “Make your tax function an essential arm of your business and make tax a key consideration in the decision-making process.”

BDO’s report contains other takes on tax from tech-industry CFOs, including these:

  • CFOs are eager to understand the business implications of tax policy changes: That desire ranked as survey respondents’ top tax priority for this year, followed by increasing tax transparency in reporting, improving tax risk management, and transforming tax operations, respectively.
  • Digital taxes mark a top concern: More than one-third (37%) of tech-industry CFOs expect state-level taxation of digital services to have substantial impacts on their organization’s overall tax liability during the next 24 months.
  • A majority of finance chiefs plan to address tax talent challenges this year: Fifty-seven percent of respondents report that they plan to hire more tax professionals and/or leverage outsourcing to help address their growing indirect tax compliance needs.
  • Tax technology upgrades are more important, and more common, than previously thought: In BDO’s previous Technology CFO Outlook Survey, 47% of respondents reported that they planned to upgrade their tax technology (for state and local compliance requirements) in 2022. However, in this year’s survey, 55% of tech CFOs indicated that their companies actually upgraded their tax technology solutions in 2022. 

What should tax leaders in the technology industry do in response to these findings? They might consider sharing with their finance partners three recommendations that BDO provides to CFOs: 

  1. Give tax a seat at the decision-making table; 
  2. Remain vigilant on tax policy changes, especially “how taxation of the digital economy evolves;” and
  3. Invest in the right tax technology solutions to reduce compliance risks.

Sound advice, if you ask me. 

Blog Author

Larry Mellon, Tax Directory, Vertex Inc

Larry Mellon

Tax Director, Chief Tax Office

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Larry Mellon is a Tax Director in the Chief Tax Office, where he is responsible for providing insights, thought leadership and customer-centric direction to Vertex functional groups, supporting the continued expansion of Vertex indirect tax solutions and overall enterprise strategy. He has over 30 years of experience in sales and use tax compliance, risk assessment, jurisdictional audits, administration and management, as well as VAT compliance. Larry joined Vertex in 2005 as a Sales and Income Tax Supervisor and has served as Tax Manager since 2012, where he has played a pivotal role in elevating and advancing the company’s tax management offerings.

Prior to joining Vertex, Larry served as a Senior Tax Accountant and Property Tax Manager at Foamex International, Inc., a polyurethane and advanced polymer foam product manufacturer and marketer. Mellon also held multiple roles at The Franklin Mint and is a member of the Institute of Professionals in Taxation (IPT) and Tax Executives Institute (TEI).

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