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Deloitte Launches its Tax Transformation Trends Survey

At a tipping point: report reveals how key issues on the C-suite agenda are shifting where the tax function adds value to the business.

NEW YORK, NY, USA, 25 May 2021—Deloitte today announced the launch of its Tax Transformation Trends survey, which involved more than 300 tax and finance executives globally. Tax Operations in Focus, the first report in a three-part series, reveals tax leaders are increasingly being sought out for strategic counsel as companies accelerate business model transformation. In this report, Deloitte discusses with leaders the fast-moving trends that are driving businesses to shift where and how the tax function adds value, understand their future vision and how they plan to get there.

Long before COVID-19 struck, businesses in many sectors were trying to accelerate business model and operational transformation initiatives, as mega trends such as digital disruption and climate change presented new risks and opportunities. However, the pandemic intensified the pressure to transform, testing corporate resilience more than ever. “While governments have big decisions to make about how they address mountainous deficits, how they build more sustainable economies and the future of globalisation, companies are positioning themselves to thrive in the recovery by embedding new ways of working and identifying new growth opportunities”, says Andy Gwyther, Deloitte Global Operate Leader, Tax & Legal.

The tax function sits at the interface between companies and governments as these decisions play out and its strategic insight will be more in demand than ever before. For instance, as companies change their business models for the digital era, rethink their supply chains, or invest in green initiatives, failing to understand the tax implications- in areas where the rules are still nascent and evolving- may leave value on the table, or worse still, undermine the success of the new strategy.

Key survey findings include:

  • Urgency to transform resourcing models is greater than ever. 93% of tax leaders say their budget is remaining flat or falling, while business partnering demands between tax and finance leaders and their business counterparts are on the rise.
  • The strategic value of tax must be realised faster as companies accelerate business model transformation. 65% of tax leaders say the shift to digital business models is a key area where the business needs its guidance.
  • The race is on to get ahead of fast-evolving digital administration trends in tax authorities. 92% of survey respondents say transformative changes to the way companies are being required (electronic filing, real-time reporting, etc.) to provide tax information to revenue authorities is also creating an imperative to modernise at a faster pace. These tax and finance leaders say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years- and leaders say the trend is moving faster than expected.
  • Tax leaders are prioritising data simplification and lower-cost resourcing as a foundation for the future vision. Simplifying data management (53%) and moving to lower-cost resourcing models (51%) are the priority strategies as tax redefines its role.
  • CFOs are beating the outsourcing drum the loudest. 44% of C-level respondents (two-thirds were CFOs) think outsourcing is the most important strategy for lower-cost resourcing models, ahead of automation (39%) or shared service centres (31%). The survey shows a gap between the strategies the C-suite see as most important and those Tax leaders who favour shifting work to other parts of the business, see as most important.
  • Those already on their transformation journey are already seen to be adding strategic value. Where tax teams have introduced next generation enterprise resource planning (ERP) systems, 56% are seen as highly effective at supporting the business with scenario-modelling insights, compared to 35% of others.

All of this creates a new business teaming and collaboration imperative for company tax functions. “The C-suite can no longer afford for their tax teams to be consumed by routine compliance and reporting activities”, says Phil Mills, Deloitte Global Tax & Legal Leader. “To truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs. The good news is that tax and business leaders have more options at their disposal to achieve this”.

About the Deloitte Tax Transformation Trends Survey

This research is the first of a three-part tax leader series from Deloitte, engaging tax and finance executives at multinational companies to understand their strategies for tax operations, talent and technology. Deloitte surveyed 304 senior leaders, including more than 100 heads of tax and CFOs in companies across Europe, North America and Asia-Pacific, to understand their future vision for the tax function and how they plan to get there. In addition, Deloitte conducted 15 in-depth qualitative interviews with tax leaders in the consumer goods, energy, financial services, medical technology and telecoms sectors, among others. To dive deeper into these findings, you can view the full report.