Three Tax Transformation Priorities

The need to respond to a rapidly changing regulatory environment is reshaping enterprise tax strategies, according to a new Deloitte report. The report’s analyses of current tax transformation trends are based on survey responses from 300 senior tax and finance executives. 

Here are some noteworthy transformation trends that reflect pervasive tax-department priorities:  

• Holistic data management and integrated systems are required for insight-driven global compliance. Ensuring rigorous tax compliance and selecting the right technologies (including tax data analytics) to achieve this is on the minds of these executives. When asked to identify their top priorities for their tax department in the next three to five years, compliance with new tax law changes was the top response, cited by 38% of the survey respondents. When asked to identify their greatest challenges over the same period, the most common response was complying with evolving tax laws and regulations around the world (43%).  
• Costs and efficiency remain important, but they are not the top priority of tax transformation efforts. While compliance has moved to the top of the tax agenda, achieving greater efficiency remains a key objective. So, where will companies focus their cost-control efforts over the next year or two? Here are the top five areas, according to the survey respondents: 

1. Global tax provision. This is the most common priority for a lower-cost resourcing model, cited by 40% of participants, down from 45% in a similar study in 2021. 
2. Tax data management. Cited by 38% of executives in 2023 (no data was available from 2021 to make a comparison). 
3. Tax governance and risk management. About one-third (35%) plan to make cost savings here, down from 44% in the earlier survey. 
4. Advising on tax policy. Not much change here year-over-year: 34% in 2023, 35% in 2021. 
5. Transfer pricing documentation. This moved slightly higher on the cost-control agenda – 34% this year, up from 30% in 2021. 

• Outsourcing provides valuable access to the latest technology. Fifty-four percent of survey participants said that this is a major or significant benefit of an outsourcing strategy. 

Deloitte expects the pressure from regulatory changes to continue, and notes that the research demonstrates “a heightened need to extract data-driven insights from compliance activities and for more agile partnering with other parts of the business”.  

We’ve witnessed the same need – from what Vertex Director, Strategic Development & Emerging Markets David Deputy has described as a “fitness tracker” for indirect tax teams – in our work with companies of all sizes.