US tax executives’ top goal for their tax departments in 2022 is planning for domestic and global tax changes, according to BDO’s “2022 Tax Outlook Survey.” With uncertainty around whether any of the tax provisions contained in last year’s now-defunct Build Back Better bill will move forward in smaller legislative packages, tax executives are finding it difficult to operate within this tax policy environment.
Keeping up with regulatory and compliance changes ranks as a top personal challenge for tax executives: 43% said changes to the U.S. federal corporate tax system is their top overall concern, an increase from 35% in 2021 — despite increases in the corporate tax rate essentially being off the table as of the end of 2021.
To help them optimize their processes, improve efficiencies and manage workloads amid legislative uncertainty and staffing shortages, tax executives are relying on technology: 97% say they plan to invest in tax technology this year, with more than half planning to invest in data analytics, business intelligence software, tax provision software and tax automation.
But end-user adoption will be a hurdle: Tax departments struggle to train their teams to learn new tools and processes.
Despite struggling with legislative uncertainty and technology implementation, tax executives are largely optimistic: 72% of tax executives say their tax department is thriving.
In 2021, respondents cited transforming the tax function for greater efficiency and better insights as their top mandate—and that work appears to have paid off. Reported benefits from tax technology investments include higher reporting accuracy, better visibility into their total tax liability and revenue/profitability increases, among others.
Tax departments prioritize ESG
Tax departments are working toward environmental, social and governance (ESG) goals, including improved tax transparency; 95% of tax executives say their department plays a role in developing tax transparency reporting programs, but they face hurdles to aligning on reporting standards and procedures.
The tax department is looking to find its role in achieving their business’s ESG goals and strategy: 53% believe they should be “very involved” in strategic conversations about their organization’s ESG program. Nearly half (49%) say they are already involved in these conversations.
While they may now have more reporting responsibilities, most respondents see the value the adoption of ESG provisions brings to the organization: 86% of tax execs believe that ESG initiatives have a long-term, positive impact on financial performance, compared to 64% of CFOs surveyed by BDO who say the same. Tax executives were also much more likely than CFOs to cite improving their company’s ESG rating as one of their main ESG objectives.