KPMG LLP SURVEY: 40% OF C-SUITE LEADERS WILL INVEST $10M+ IN ARTIFICIAL INTELLIGENCE TO TRANSFORM TAX DEPARTMENTS
- 99% say AI is the “next frontier” for corporate tax departments
- 54% cite the complexity of gathering data as the top reason they are unprepared to disclose their total tax contributions in light of increased ESG pressures
- All (100%) agree that better leveraging data from across the organization will help tax departments see around the corner and influence smarter business decisions
NEW YORK, June 28, 2023 /PRNewswire/ — By effectively leveraging data and harnessing the power of technology like artificial intelligence (AI), corporate tax departments can drive even greater value for the broader business. That’s according to the latest edition of the annual KPMG LLP report, “Tax Reimagined 2023: Perspectives from the C-suite,” which shows that when tax departments are armed with the right technology and talent with the right mix of skills, they will be recognized as a strategic powerhouse.
The findings from the report, which features insights from 500 C-suite executives at organizations with $1 billion or more in revenue, indicate three primary trends:
- A strong willingness to embrace AI – more than half are already using AI in their tax departments
- Increasing ESG pressures to address tax transparency
- A sharp increase in the willingness to turn to alternative sourcing arrangements, like outsourcing or co-sourcing, to leverage the skills and technology investments of third-party providers.
With external factors like the uncertain economy, the ever-changing international and domestic legislative and regulatory environment, as well as the rapidly evolving technology landscape, the clock is ticking for tax departments to prioritize investments in emerging technology and talent, or risk being left behind.
Artificial intelligence – the next frontier for tax departments
- 59% of surveyed leaders are already using emerging AI technology in their tax or finance department to make workflows more efficient and reduce the strain on existing talent.
- Of the 41% who aren’t yet using AI, all are interested in doing so.
- 100% say the proliferation of artificial intelligence will change their tax department’s human capital strategy.
Willing but unprepared – when tax comes face-to-face with ESG
- 95% of respondents are willing to disclose their total tax contributions, however 85% of those say they are not currently prepared to do so.
- As regulatory bodies in the US and abroad begin to require greater tax transparency, a surprising 62% of C-suite leaders estimate it will be at least five years before their organizations are mandated to disclose their total tax contributions.
- 40% say the greatest risk to disclosing their organization’s total tax contributions is giving away competitive intelligence.
Measured speed – the 21st century business currency
- 94% of respondents say they have become more willing to outsource or co-source their tax function over the past year (compared to 43% in 2022 and 65% in 2021).
- Nearly all (99%) executives would consider an alternative sourcing model to leverage the technology expertise, tools and skills of a third-party provider.
- Of those willing to leverage a third-party provider, 73% admitted to having a tough time recruiting talent with the technology-minded skillsets needed for the future.
Convergence of tax and tech – the anatomy of the modern tax professional
- Most leaders still prefer to hire tax experts who can learn technology (54%), in line with 2021 and 2022 findings.
- This year, slightly more expressed a willingness to hire technology experts who can learn tax (46%), than in years past (43% in 2022 and 41% in 2021).
- 47% say data analysis is the most important skill needed to ensure the tax department operates at its full potential.
- Almost half (47%) say that revamping the perception of a tax career is their top method to attract new talent.
“Tax transparency is becoming an increasingly important part of the ESG conversation,” said Greg Engel (@Greg_Engel_KPMG), Vice Chair – Tax, KPMG LLP. “With mandatory tax disclosures on the rise, companies must act now to prepare. Embracing AI tools may be the solution to help companies make sense of their vast amounts of data to avoid the risks of having their tax story potentially told for them. Embracing technology is essential for companies to stay ahead of the curve.”
“As technology and innovation continue to transform the tax landscape, talent is more critical than ever,” said Rema Serafi (@RemaSerafi), National Managing Principal – Tax, KPMG LLP. “The modern tax department requires a convergence of skills to understand the tax technical landscape, operate cutting-edge technology and analyze complex data. A tech-first mindset blended with tax skills is the winning formula to unlock the full potential of tax departments in the digital age.
“AI will create a corporate reality of the ‘haves’ vs. the ‘have nots’ between those who adopt the technology to transform their tax departments and those who get left behind,” said Brad Brown (@Brad_Brown_KPMG), Chief Technology Officer – Tax, KPMG LLP. “KPMG has been investing in AI for more than a decade. By putting AI technology in the hands of our professionals, we’re changing the game in how we serve and deliver for our clients.”
The KPMG “Tax Reimagined 2023: Perspectives from the C-suite” survey was conducted by Wakefield Research (www.wakefieldresearch.com) between March 10 and March 30, 2023, among 500 US C-suite executives at companies with annual revenue of $1B+. The margin of error for this study is +/- 4.4 at 95% confidence.
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