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Two Surveys Find Corporate Tax Departments Concerned About Legislative Changes Ahead

By:
Ruth Singleton
Published Date:
Mar 17, 2022

GettyImages-1327275366-tax-2022

Two recent surveys of corporate tax executives found that their departments are significantly concerned about potential legislative tax changes on the federal level. Many are also planning on automating their processes to promote efficiency, as well as to make up for a shortfall in talent.

The 2021 Bloomberg Tax Corporate Tax Department Survey reached out to managers, senior managers, directors, vice presidents, and C-suite members of the tax department of public or private corporations with more than $500 million in annual revenue in August and September 2021. There were 372 respondents. 

According to the Bloomberg survey, “Uncertainty has been a constant companion for business long before the global coronavirus pandemic began in 2020. Corporate tax departments are no strangers to dealing with evolving economic, legislative, and competitive landscapes. Yet the past two years have brought new levels of uncertainty amid other worsening challenges, such as the growing talent shortage.

The survey found that the 56 percent of respondents said that the top challenge facing their tax department was legislative tracking/tax reform/staying up to date on tax changes. That percentage increased from 34 percent in 2020. The second biggest challenge, reported by 46 percent of respondents, was finding the time for and/or conducting planning activities, such as scenario analysis and modeling. Other challenges reported by the respondents were implementing new/better technology using existing technology  systems (43 percent), overall compliance burdens (41 percent) and mergers and acquisitions impacts (35 percent).

The Bloomberg survey also found that “[t]he talent deficit continues to plague many corporate tax departments." Sixty-nine percent of respondents found that recruiting and retaining top tax professionals was very or somewhat difficult. Looking ahead, fully 87 percent anticipate that recruiting/retaining top talent over the next two years will be much more or somewhat more difficult. 

BDO’s 2022 Tax Outlook Survey also found a high level of uncertainty among respondents. That survey polled 150 tax executives on questions ranging from their tax planning strategies to their views on environmental, social and governance (ESG) initiatives. Its  findings “indicate that recently enacted and proposed tax policy changes continue to pose challenges to tax executives and their teams. To stay abreast of anticipated changes, tax leaders are turning to new technologies but encountering challenges with end-user adoption.

The respondents said that the No. 1 tax issue heading into 2022 was proposed U.S. federal tax changes, and that the greatest challenge to their tax departments was training their teams to use available technology tools and processes.  

Specifically, 43 percent of respondents said that their top concern over policy change was  U.S. federal tax changes. That rose from 35 percent in 2021. Seventeen percent listed state and local tax changes as their top concern, while 16 percent said global tax reform, 12 percent said employment tax/payroll tax adjustments and 12 percent said tariffs and trade.

When asked about the biggest challenge for their tax departments, 22 percent said training their team on technology tools/process; 16 percent said managing essential tax work an increasingly remote workforce; 14 percent said access to actionable data; 14 percent said influencing strategic business decisions; 11 said transparency and collaboration with management; 11 percent said recruiting and retaining the right talent; 9 percent said determining whether to co-source or outsource tax work; and 3 percent said automation of routine process.

And when asked what specific areas of tax technology their departments were planning to invest in, 55 percent said data analytics software, 54 percent said business intelligence/visualization software, 53 percent said tax provision software, 53 said tax automation, and 48 percent said tax compliance software.

Other developments causing concern for tax departments this year include surging inflation, interest rate increases, the war in Europe, global minimum taxes and the continuing pandemic, Accounting Today reported. 

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