The following is a guest post from Rema Serafi, vice chair of tax at KPMG. Opinions are the author’s own.
In today’s rapidly evolving business landscape, CFOs face an unprecedented convergence of challenges in the tax realm. What we at KPMG call the “tax trifecta” — the impending expiration of Tax Cuts and Jobs Act (TCJA) provisions in 2025, the ongoing implementation of the OECD’s global tax deal and waves of regulatory change — is reshaping the corporate tax function. As revealed in our recent survey of 500 U.S. C-suite executives, this new reality demands a strategic pivot in how organizations approach tax management and its role within their operations.
The changing face of tax
The survey findings paint a clear picture: 95% of executives agree the current tax environment is more challenging to predict and plan for than ever before. This complexity, however, presents an opportunity for CFOs to position their tax departments as strategic drivers of organizational success.
The looming “tax cliff” in 2025, when numerous TCJA provisions are set to expire, is a particular concern. With potential tax increases of over $4 trillion on the horizon, 71% of executives anticipate a high to moderate impact on their businesses. Similarly, the implementation of Pillar Two (the global minimum tax) is expected to be costly, with 86% of respondents expressing concerns about increased compliance burdens.
Embracing tech and data
In this complex landscape, technology emerges as a critical ally. Nearly all executives (98%) said they plan to invest in artificial technology or generative artificial technology capabilities for their tax function in the coming year. This technology is seen as key to navigating challenges like Pillar Two implementation, with 88% of leaders viewing it as a crucial tool.
However, technology alone is not the answer. The true power lies in data utilization. A staggering 95% of executives agree better leveraging data from across the organization will help their tax departments anticipate future challenges and influence smarter business decisions. Yet, only 60% report regularly using data to drive decision-making, highlighting a significant opportunity for improvement.
The evolving role of tax departments
CFOs should recognize that tax departments are no longer just compliance centers. They are evolving into strategic partners capable of driving organizational trust and value. In fact, 90% of C-suite leaders now view their tax department as a key player in increasing multistakeholder trust.
This evolution necessitates a reimagining of talent and operating models. There’s a growing preference for hiring technology experts who can learn tax, rather than the reverse. Additionally, 87% of leaders are increasingly open to leveraging managed services models to navigate complex regulatory landscapes like Pillar Two.
The path forward for CFOs
As organizations navigate this new era, CFOs should consider the following strategies:
- Invest in technology. Prioritize investments in AI and data analytics to enhance predictive capabilities and streamline compliance.
- Foster cross-functional collaboration. Break down silos and encourage collaboration between tax, finance, IT, and other departments to leverage data effectively.
- Upskill your team. Focus on developing a workforce that blends technological proficiency with tax expertise.
- Position tax strategically. Elevate the tax department’s role in strategic decision-making and stakeholder trust-building.
- Consider alternative operating models. Explore managed services or co-sourcing arrangements to access specialized skills and technologies.
The tax landscape is undoubtedly complex, but it’s also ripe with opportunity. By embracing these changes and positioning tax departments as strategic assets, CFOs can not only navigate the current disruptions but also drive their organizations toward greater resilience and success in the years to come.
As a tax leader, I’ve witnessed firsthand the transformative power of a strategically positioned tax function. CFOs who seize this moment to reimagine their tax departments will find themselves at the forefront of organizational innovation and growth. The challenges are significant, but so too are the opportunities for those ready to lead through this era of disruption
