Tax Managers’ Top Compliance Concerns

Tax compliance qualifies as a growing concern among CFOs and other finance executives. Their unease stems from a combination of factors, including the growth of cross-border e-commerce, new and increasingly complex tax rules, and intensifying enforcement activity among state and federal tax authorities. Tax leaders are, of course, well-aware of these tax compliance challenges – and they have their own concerns when it comes to addressing compliance and related priorities. 

To shed light on the nature of these concerns, IDC surveyed finance executives, tax leaders and other buyers of finance and tax SaaS solutions. IDC Research Director, Financial Applications Kevin Permenter shared results from that SaaSPath Survey at Vertex Exchange during his presentation on tax transformation. (My colleague, Vertex VAT Director Peter Boerhof, provides some practical context on the current state of tax transformation in this post.)

Finance leaders report that increasing cross-border e-commerce activity requires additional compliance actions to be performed. Finance executives also point to the rise of e-invoicing and the rapidly evolving nature of digital taxation as formidable compliance challenges.

According to the results of IDC’s SaaSPath Survey , corporate tax managers identified four primary areas of concern, including:

1. Shifting regulations: Tax departments are experiencing difficulties keeping pace with the onslaught of regulatory and compliance changes that occurred in the past year. Plus, regulatory changes in the UK and EU appear likely to have major implications on global commerce in 2023 and beyond. Sixty-one percent of the survey’s respondents indicated that new e-invoicing compliance requirements in Europe, South America and other regions will have significant impacts on their tax management processes. 
2. Harnessing technology: Many tax managers report that their technology tools are not up to the task. IDC’s survey results showed that more than half (53%) of tax managers who responded reported that they are extremely open to switching to a new tax management solution.
3. Disparate data: As more companies deploy additional sales channels and manage increasingly complex supply chains, tax functions are having difficulty accessing all of the data needed to comply with relevant tax rules. This data is often spread across multiple disconnected systems. This challenge is likely to grow, as shown by the 35% of survey respondents who shared that their companies plan to deliver new digital products and services during the next 24 months. 
4. Budget restraints: Despite adapting to unprecedented changes and compliance challenges, many tax managers must cope with resource and/or budget constraints. This forces tax leaders to have to find ways to do more with less.

While these are daunting challenges, tax automation can help address most of these issues.