The globalization of regulations, frequent changes in the law, and the growing digitalization of settlements are prompting businesses to reorganize their tax functions and teams. It’s becoming imperative for companies to hire external experts, who not only possess the necessary legal knowledge but also valuable experience gained from working on international projects. According to the Tax Transformation Trends 2023 report by Deloitte, 74% of companies are outsourcing in at least one tax area.
The authors of the report examined trends and processes affecting the current situation of tax functions in businesses. Their diagnosis was based on a survey conducted among 300 tax and finance leaders representing companies of various sizes, sectors, and regions. Several qualitative studies were also used to identify patterns.
38% of the respondents believe that the area of tax reporting is one of the top three priorities for tax departments. Alarmingly, 43% felt that the main challenge over the next 3-5 years will be the flexible adaptation to changes in tax law.
“Numerous new regulations, such as e-reporting in the VAT area or the introduction of the global minimum tax – Pillar II, are particularly demanding. This is due to the need for new IT systems. Professionals in this field must have competencies both in finance and accounting as well as in IT,” says Paweł Hulewicz, an associate partner in Deloitte’s tax technology team.
Other priorities mentioned by respondents include effective tax rate management (37%) and implementing regulations and obligations related to ESG (33%). Effective action in these areas often requires expert knowledge, typically beyond the qualifications of internal company employees who have usually focused only on strictly tax aspects.
Modern Technologies Increase Outsourcing Demand
The growing need for specialized yet multidisciplinary skills essential for fulfilling tax obligations is increasing entrepreneurs’ tendency to seek support through outsourcing. Interestingly, when asked about the significant benefits of external support, respondents cited access to the latest technology (80%) and the expert knowledge of subcontractors (80%). Only third came reduced operational costs (78%).
“To meet today’s challenges, it’s essential to focus on the key role of technology in many aspects of tax operations and transforming this function in the company. Cooperation with an outsourcing partner can be a vital element of the strategy for tax departments aiming for efficiency and data access. The ability to use modern technological tools is increasingly valued, and outsourcing allows for their effective acquisition without significant capital investment,” says Piotr Świętochowski, a partner and leader of the expert support team for financial departments and shared services centers at Deloitte.
International Regulations Require a New Approach
The coronavirus pandemic led to a global shift towards hiring external tax service providers. Exceptional state regulations and the need for modern solutions accelerated business changes. Comprehensive data management and integrated systems are required for effective global compliance.
Although the trend has stabilized, the dynamic development of technology use in settlements and tax reporting remains an important reason to seek external expert support. In Poland, a significant challenge related to time-consuming and intricate processes is the extensive preparations for implementing electronic invoicing within the National e-Invoice System (KSeF).
“By mid-next year, key regulations introducing the mandatory use of KSeF will come into force. Although financial penalties for non-compliance will not be imposed immediately but with a six-month delay, it’s essential to ensure the smooth implementation of e-invoicing in companies. It’s worth noting that invoicing isn’t just a tax process but is a crucial business process. The successful implementation of KSeF will directly affect operational efficiency,” says Norbert Wasilewski, an associate partner in Deloitte’s indirect tax team.
Challenges in Hiring Specialists
When asked about challenges in the coming years, 35% of respondents anticipate difficulties accessing tax specialists. Some claim that individuals with a unique set of skills, combining tax-law knowledge, financial understanding, and technological competencies, are practically unfindable in the job market.
Broad competencies are increasingly demanded, especially among tax department employees aspiring to play a role close to business consultancy. Both soft skills, such as communication, teamwork, and quick adaptation to changes, and technical abilities like knowledge of new IT systems are vital. Tax departments are restructuring and adapting to a changing legal and regulatory environment, thereby creating professional teams equipped with the required skills, especially in data management and technological knowledge.
Respondents also highlighted a high demand for team members proficient in “transactional taxes” (35%), risk management (29%), and communication (10%). Interestingly, compared to 2021, there has been a decrease in the percentage of those noticing the need to strengthen their teams in the field of specialized tax knowledge (40% in 2021 vs. 36% now) or technological transformation and process redesign (43% two years ago vs. 29% today).
About the Study:
This report presents the key findings from a broader biennial study on tax transformation trends aimed at tracking market changes. Deloitte surveyed 300 senior tax and finance leaders from Asian, European, and North American companies across various industries and sizes. They also conducted a series of individual qualitative interviews with senior tax executives in large international companies to gain deeper insight into their tax transformation efforts.
