Strategic tax leaders are especially concerned the November U.S. presidential election will lead to changes to certain Inflation Reduction Act renewable energy credits, while tax tacticians are most concerned about changes to federal corporate tax rates, according to a new survey.
The
Nearly half (44%) of all organizations plan to increase investment in tax risk management in 2024 in response to changing regulations, rapid growth and outdated technology.
"The 2024 elections will have a considerable impact on tax policy," Todd Simmens, tax policy and legislation practice leader at BDO USA, said in the report. "Proposed changes include the extension of certain tax credits and extension of provisions included in the Tax Cuts and Jobs Act of 2017, as well as possible changes to the corporate alternative minimum tax rate. Staying informed about possible tax policy changes allows tax leaders to take a proactive approach to navigating impending challenges before they are enacted into law."
International policies and rules, including those related to Pillar Two of the Organization for Economic Cooperation and Development's framework to address base erosion and profit shifting, will also be significant for companies with an international footprint. Over 140 jurisdictions have agreed to adopt a two-pillar solution under the OECD framework to address the challenges arising from the digitalization of the economy. Pillar Two introduces a 15% minimum tax on multinational enterprises with consolidated revenue over 750 million euros on income from low-tax jurisdictions. Of those jurisdictions, around 30 have enacted Pillar Two legislation or are in the process.
The survey also looked at attitudes toward artificial intelligence and slightly more than half of the tax leaders polled (51%) said their teams will deploy artificial intelligence and machine learning in the next 12 months, but many lack the proper data foundation.
The survey polled 180 senior tax leaders at companies with revenues ranging from $250 million to $3 billion in February, and divided the respondents in tax strategists and tax tacticians. The survey was done by Rabin Roberts Research, an independent marketing research firm, using Slice MR's panel of executives. The group of respondents to the 2024 survey differed from the 150 tax leaders polled in 2023. This year's survey indicated fewer tax leaders are operating at a highly strategic level, compared to last year's study. Thus, fewer respondents were classified as tax strategists, a category of tax leader who has substantial influence over key business decisions. Instead, more survey participants were categorized as tax tacticians — that is, tax leaders who contribute strategically to the business but are more often consulted after business decisions are made.
The year-over-year decline in tax strategists suggests that in an increasingly complex tax environment, many leaders are probably becoming entrenched in the day-to-day reporting and compliance demands of the job. Faced with navigating intricate global tax requirements to leading new technology initiatives, tax leaders may be overburdened and under-resourced, and that's preventing them from taking on a larger role in shaping overall business strategy.
"To transition from Tactician to Strategist, tax teams need a shift in approach," Matthew Becker, national managing principal of tax at BDO, said in a statement Monday. "First, they should evaluate their team, processes, and technology to identify areas for improvement. Then they should consider how to bolster communication with key organizational leaders to build trust and advocate for the resources needed to execute effectively. Finally, they should involve the entire tax team in strategic efforts. This will foster a culture of collaboration, innovation and growth."
