{{item.videoDuration}}
{{item.title}}
{{item.text}}
{{item.videoDuration}}
{{item.title}}
{{item.text}}
Getting a seat at the table is just the beginning for tax leaders
Whether restructuring, implementing digital or workforce transformation, or evolving the operating model, every strategic business decision has tax implications. However, for the tax function to effectively influence a company’s business and operating model strategy, tax leaders must be closely aligned to their C-suite colleagues. But our latest Pulse Survey tells us that while 86% of tax executives prioritize being a strategic business partner to the CEO, only 48% of CEOs say the tax leader is very aligned with their vision for the company’s future.
It’s who tax knows – and who knows tax – that counts
82%
of tax leaders say expanding the function's influence across the C-suite is a priority
Tax leaders have opportunities to strengthen the relationship with both the CEO and other C-suite executives by connecting the company’s vision and market catalysts to tax implications. More than eight in 10 (82%) say it’s a priority to expand the tax function’s influence across the C-suite, and 86% are teaming with other departments. This is especially important for companies undergoing business model reinvention.
Because of the holistic nature of business model reinvention — fundamentally changing how a company creates, delivers and captures value — it’s even more critical to structure the business in a tax-efficient way. There are tax implications to changing sales channels, processes and systems, and products and service offerings.
Some tax leaders, however, are missing an opportunity to work more closely with their colleagues. Only 56% of tax executives say they are identifying opportunities to enhance the ROI on investments, such as generating tax credits under the Inflation Reduction Act (IRA). Identifying and strategically leveraging various tax incentives can help reduce the tax liability and operating costs. Opportunities include:
Research and development credits that can support innovation.
Green incentives that can help fund environmentally friendly initiatives.
Training and workforce development incentives that can help retrain employees affected by new business models.
What you can do
Engage with the CFO to foster better alignment with the CEO and other executives. Reposition discussions to focus on understanding the strategic vision of the company to align tax strategies accordingly. CFOs can then help communicate the importance of tax considerations in business decisions.
Identify and communicate the potential benefits of generating tax credits under the IRA. Align your suggestions based on your understanding of the company’s business strategy to help highlight how tax can add value.
Get more on this topic
- Executives are increasingly optimistic about the business environment and their companies’ ability to mitigate risk. Find out more.
- What are the top strategic priorities for sector executives?
- What else is important to tax executives right now?
How tax can create value amid regulatory uncertainty
82%
of tax leaders say evolving and expanding tax regulations challenge their function’s ability to be a strategic player
Tax executives see a number of challenges to their ability to be a strategic business partner, from disparate data sources that complicate tax reporting to a tight talent market. The biggest challenge for tax executives is evolving and expanding regulations, which 82% say majorly hinders their ability to be a strategic partner to the business. But the regulatory stakes will only get higher in the coming year. Since Pillar Two took effect in January, tax executives have been navigating the data-intensive calculation process to comply. The global minimum tax increases the complexity and cost of tax compliance, and some companies face cash and book tax expenses.
As Pillar Two evolves, new requirements for public data disclosures also continue to expand. This includes recently enacted FASB income tax disclosure rules that will impact tax footnotes and mandatory public country-by-country tax reporting in the EU and other jurisdictions. Legislative uncertainty in the US may further complicate things. Many provisions from the 2017 Tax Cuts and Jobs Act are scheduled to expire in 2025, including tax cuts for the middle class. US corporate international tax increases are scheduled to go into effect at next year’s end.
To help their companies stay competitive, 65% of tax executives say they’re evaluating ongoing policy changes to better align the commercial strategy. To do so, they will need additional resources to keep pace. Investing in the right staffing mix to evaluate the impact of pending regulatory guidance proactively and quickly, investing in technology for modeling and analytics, and communicating potential economic impacts can make a difference.
What you can do
Leverage technology for scenario planning. Proactively use data and analytics to model the impact of different scenarios and provide strategic insights to the business. Automate the tax-system updates to include the latest regulations to help ensure compliance with the most recent rules.
Leverage AI to help identify and manage risks associated with changing tax regulations. This can help you avoid penalties and reputational damage.
Advocate for additional budget and resources. Ask for the necessary technology and data support. Consider adding flexible resources through third-party providers, such as managed services, that you can scale up and down as necessary.
Tax risk management as a strategic move
71%
of tax leaders say they’re actively managing tax risks to help their companies stay competitive
Tax is finding ways to help the company stay competitive. Seventy-one percent are leaning into two areas. One, confirming the tax function is aligned with the business strategy. The second is core to the function’s compliance responsibilities: Actively managing tax risks like potential controversy and unexpected tax triggers.
An unprecedented level of tax authority audits and tax-related litigation is emerging as jurisdictions seek to meet the demand for additional revenues. Increasing transparency could lead to greater potential reputational risk and more tax controversy to the business, which can rise to the C-suite level. This highlights the need for better technology and a new strategy for tax data to help the company deal with the increase in audits and disputes and provide information for better decision-making and planning.
More than half (54%) of tax leaders say they’re investing in new technology as one of their strategic business changes in the next 12 to 18 months, but only 43% are investing in generative AI (GenAI) specifically. Notably, increasing the use of technology and automation is cited as important, with 58% of tax leaders saying it’s a high priority.
What you can do
Use technology for compliance. Tax leaders can use technology to help them be more compliant with changing global tax regulations in several ways. By automating routine tasks, for instance, tax leaders can help confirm their teams are consistently following the latest regulations and reduce the risk of human error. Advanced data analytics can help tax leaders identify trends and patterns in their tax data, which can provide insights into potential compliance issues.
Recognize the benefits technology can offer for reporting and training. Technology can streamline the reporting process, making it easier for tax leaders to provide the necessary documentation to demonstrate compliance with global tax regulations. It can also be used to provide ongoing training to tax teams, keeping them up to date with the latest global tax regulations.
Get access to the complete survey response data and future insights
View the main Pulse Survey
Finding opportunity in reinvention
About the survey
Our latest PwC Pulse Survey, fielded May 15 to May 22, 2024, surveyed 673 executives and board members from Fortune 1000 and private companies about the current business environment, the risks executives are facing and their company’s strategic plans and priorities. Of the respondent pool, 79 were tax leaders.
Past surveys
{{filterContent.facetedTitle}}
{{contentList.loadingText}}
{{contentList.loadingText}}
Contact us
Follow us
