Thomson Reuters’ latest report, The 2022 State of the Corporate Tax Department, paints a vivid picture of corporate tax departments across the globe, being pulled in multiple directions due to the ever-changing and increasingly complex business and regulatory environment. This is taking place at a time when tax departments are being asked to analyze more data, assess a wider range of risk, and provide more strategic intelligence while available resources remain stagnant.
According to the report, which covers the survey results of 580 tax professionals, corporate tax departments’ strategic priorities are impacted by the expectation of imminent regulatory changes, government legislative actions, complexities in tax workstreams, and the adoption of new tax technologies.
The top priorities for tax departments in 2022 generally fall into these four themes:
- Improve departmental effectiveness: Meet deadlines and comply with tax requirements.
- Safeguard risk: Identify and manage all types of corporate risk, both internal and external.
- Improve efficiencies: Deploy new capabilities and automation to address the day-to-day challenges in corporate tax departments.
- Find talent: Attract people with the right skillset as workers retire, leave for other companies, or switch professions.
The report also provides a view into the major challenges tax departments face in meeting strategic priorities. These challenges can be categorized as follows:
Technology
64% of survey respondents rated their department’s level of technological sophistication as either “chaotic” or “reactive,” which is worse than last year’s rating of 53%. The problem is even more pronounced in the under-resourced tax departments around the world. Tech budget unsurprisingly is the biggest hurdle for most tax departments.
Tax department spending & resource allocation
Overall tax department budgets have increased for corporate tax departments but haven’t risen in proportion to increased business activities. Therefore, tax department spending as a percentage of total revenue has declined for most small and mid-size businesses.
As expected, the number of companies with low proportional spending correlates to the number of respondents reporting their companies as being under-resourced. However, there are a few caveats buried in the stats. Interestingly, companies with less than $50 million in revenue were more likely to say they have the resources they need. This may be because SMBs tend to have a smaller global footprint and therefore have less exposure to the changing regulatory climate outside of their home market.
Finding and keeping talent
According to a recent CFO survey, CFOs are finding it hard to hire and maintain talent even as they aggressively enhance pay and benefits packages. Younger workers are no longer motivated purely by compensation. They’re entering the workforce with better technical, leadership, and communication skills and a more in-depth understanding of their company’s business strategy.
It’s increasingly important for companies to understand how their employees prefer to work and expect to be treated. The 2022 State of the Corporate Tax Department Report indicates that feelings of underappreciation and lack of career progression are some of the biggest drivers of employee attrition.
Judging from this year’s survey results and report, it’s clear that the success of tax departments will rely on establishing a balance between the demands of technology and employees’ needs rather than the number of technical solutions it has at its disposal.
Read the full report to uncover all the insights from the survey.