- Improving accountability to clarify the tax department’s roles and responsibilities within the context of a company-wide, board-approved tax governance framework.
- Improving standardization to automate and strengthen tax processes and controls and ensure all tax compliance obligations are met efficiently and effectively.
- Improving connectivity between the tax department and other departments how they work together.
The new survey discusses the progress of tax departments in these three areas. The findings show that tax departments are markedly improving in the area of accountability, and are making some strides forward on standardization and efficiency. However, tax departments still seem to have much more work to do on increasing their connectivity, integration and alignment with other functions.
The focus on these areas makes intuitive sense. Clear accountabilities can ensure that the tax department strategy is aligning with and supporting the wider company or enterprise strategy and that tax department goals and performance measures are agreed upon with key stakeholders. Standardization of processes and technology improves consistency, quality and efficiency, allowing tax teams to spend less time on compliance and more on value adding pursuits. Connectivity and participation with all parts of the company -— from boards and senior leaders to other functions such as Finance, Treasury, M&A, Marketing, IT, HR, Sales and Procurement — are key to ensuring a company’s tax affairs are well managed while boosting the tax department’s value, profile and influence.
The survey reveals that forward-thinking tax directors face a difficult dilemma: as tax compliance burdens and disputes continue to mount, their departments will meet greater challenges in managing these obligations while improving their performance and focusing on the more value-adding aspects of the tax department’s role.
Given this dilemma, this current survey shows that the lessons of our 2009 report — transforming the performance of the tax department requires getting accountability, standardization and connectivity right — are now even more important.
Read the full report (PDF 848 KB) for more insight and recommendations.
Some of the stats
- 93 percent of tax departments have a strategy that aligns with their overall business strategy.
- 77 percent of tax department strategies are board approved.
- Over three quarters of respondents have performance measures related to reporting and/or compliance.
- 76 percent of respondents now have a headquarters tax function.
- 62 percent of tax departments are engaged in overall tax strategy and operational review.
- Under 40 percent of tax departments are ‘integrally involved’ in finance function transformation initiatives.
- One third of time is expected to be spent on effective tax rate optimization, cash tax planning, process improvement and integrating with the broader business.
- Two thirds of tax departments are currently involved in tax controversy.
- Over half of respondents say tax authorities have become more focused on tax and accounting processes and controls, tax strategy and risk management, and technology in the last 12 months.
- 79 percent of respondents are satisfied with their administrative budgets.