Corporate tax executives are anticipating changes in government tax requirements over the next two years, but they feel less prepared to deal with them than they did last year, according to a new survey.
The annual
The findings come as multinational companies prepare for the possible imposition of a global minimum tax rate of 15% by countries in the Organization for Economic Cooperation and Development, although the Senate has not yet agreed to pass the Biden administration’s tax proposals that were included in last year’s Build Back Better Act. Sen. Joe Manchin, D-West Virginia, also refused this month to agree to proposed increases in taxes for pass-through businesses under the administration’s scaled-back proposal.
Not only income taxes, but other types of indirect taxes such as sales and value-added taxes are adding uncertainty for corporate tax departments. Nearly four out of 10 (38%) of the survey respondents responsible for indirect tax in 2022 said their biggest challenge in preparing for upcoming governmental changes is going to be in the area of technology, up from 29% last year.
“Technology is at the heart of almost every change driver in the corporate tax space,” said Sunil Pandita, president of corporates for Thomson Reuters and author of the report, in a statement. “As corporate tax departments face an increasingly complex business and regulatory environment, they are pulled in several directions at once – from collecting and analyzing data across the enterprise to conducting wider-ranging risk assessments and participating in business planning. At the same time, there is pressure to deliver tax data faster and more accurately. The stakes have never been higher than they are now, and, as a result, departments are being forced to do more, with less.”
Over half (57%) of respondents this year said their departments were under-resourced, a 10% increase over last year’s survey. Only 2% said they have more resources than they need.
To deal with future regulatory changes, 40% of the survey respondents said they would need more resources such as external support, new hires and outsourcing to a third party. Over one-third (35%) cited the need for more efficient automation technology and streamlined processes, while 30% indicated they would need to work harder to keep up with legislative changes and implement better tax planning.
Finding and retaining talent with the necessary skills during the “Great Resignation” is a major concern for tax departments struggling to keep turnover low, as many tax executives contemplate leaving their current jobs. However, when asked how likely it is that they will still be working for their current company in five years, only 17% of workers under the age of 30 thought they would leave, and only 21% from age 31- 40 thought they might flee. By far the highest flight risk exists in the over-60 crowd, two-thirds of whom said the exit door was in sight, mainly due to retirement. Only 57% of the companies in this year’s survey said they had a succession plan in place, and the average level of experience for those who are next in line was 10 to 20 years.
