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2021 Corporate Tax Department Survey Results
Last Updated March 11, 2022
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Uncertainty has been a constant companion for business long before the global coronavirus pandemic began in 2020. Corporate tax departments are no strangers to dealing with evolving economic, legislative, and competitive landscapes. Yet the past two years have brought new levels of uncertainty amid other worsening challenges, such as the growing talent shortage.
Our top findings for 2021 echo the themes we’ve seen over the past several years while highlighting how the corporate tax department continues to evolve within its role as strategic advisor to the business.
This year’s findings from the 2021 Bloomberg Tax Corporate Tax Department Survey shed light on these and other questions around the evolving state of the corporate tax department. More than 370 managers, directors, vice presidents, and C-suite executives in public and private companies across the U.S. shared their insights into the challenges, mandates, roles, staffing, and technology choices they’re facing within their organizations today.
Here we share a collection of highlights and unique perspectives to help you benchmark where your tax department stands now and going forward.
[For full survey results and analysis, plus more tools and insights from Bloomberg Tax, download our 2022 Quarterly Outlook.]
Biggest challenges facing the tax department
This year, legislative tracking not only retained the top position as the biggest challenge, but continued to increase, with 56% of respondents citing legislative tracking/tax reform/staying up to date as the top challenge. The results were the same across the board, whether public or private company, smaller or larger tax department, or industry sector.
Given the uncertainty of future tax changes, it’s not surprising to see the second biggest challenge being finding the time for and/or conducting planning activities such as scenario analysis and modeling (46%). Planning and modeling are crucial to help company executives understand potential implications of tax reform and global changes and inform appropriate business strategies.
“We have been tracking the potential tax changes … and discussing its impact with our tax advisors to better understand the changes and the various effective dates for all of the provisions. I’d say it’s never too late to start modeling out the impacts with different tax scenarios.”
Changes to the tax department mandate
Respondents report that the most prevalent tax function mandate over the past three years has been reducing costs and promoting efficiency in tax administration (45%). This aligns with the assumptions made by respondents in previous surveys. In 2018, reducing costs (38%) ranked second behind improving tax planning as the anticipated mandate going forward. Our pre-Covid-19 survey showed it ranking first with 43% and growing to 55% after the Covid-19 pandemic hit.
However, with the surprisingly strong economic rebound in the first half of 2021, this year’s survey shows that reducing costs will no longer be the top mandate over the next two years. Instead, reducing cash tax payments/effective tax rate and improving tax planning/tax-related decision support are tied for the top spot (at 42% each). Reducing costs and promoting efficiency dropped to second place with 37%.
[For full survey results and analysis, plus more tools and insights from Bloomberg Tax, download our 2022 Quarterly Outlook.]
Difficulties with recruiting and retraining top tax talent
The talent deficit continues to plague many corporate tax departments. As in our previous surveys, 70% somewhat or strongly agree that corporate tax departments are under-resourced in 2021 and 74% believe that the department will require additional resources to fulfill its mandate over the next two years.
Yet, even as many departments prepare to increase their hiring, the reality is that doing so may be more difficult than in the past. More than two-thirds (69%) of tax departments report having difficulty recruiting and retaining talented tax professionals.
The outlook for improvement in the near term isn’t very promising. The vast majority of respondents (87%) believe that over the next two years, it will become either somewhat or much more difficult to recruit and retain top tax talent.
[For full survey results and analysis, plus more tools and insights from Bloomberg Tax, download our 2022 Quarterly Outlook.]
“Today’s young tax professionals grew up with technology. Tax departments that are forward thinking in their approach to technology adoption will be more appealing to those professionals and have a better chance to attract and retain the right talent.”
Automation unlocks value
While digital transformation accelerated across companies and industries during the pandemic, the tax department often continues to lag the rest of the company in terms of investment in and adoption of new technology. Our findings show that only three in 10 (29%) view their tax departments as innovators or early adopters of new technology and 15% consider their departments late adopters. More than half (55%) describe their tax department as typical in waiting to make sure technology is fully vetted before adopting it.
A strong majority (84%) say increased automation and AI will play a critical, important, or contributing role in plans to improve tax effectiveness over the next two years. Respondents see a range of benefits from automation and/or integration, including eliminating manual processes, increasing accuracy and productivity, and improving controls.
[For full survey results and analysis, plus more tools and insights from Bloomberg Tax, download our 2022 Quarterly Outlook.]
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