October 08, 2020
Pandemic Adds Business Continuity, New Regulatory Worries for European In-House Tax Executives; Corporate Tax Managers Rethink Staffing, Supply Chain, and Automation: Thomson Reuters 2020 Survey
LONDON and DALLAS, October 8, 2020 – Dramatic unforeseen changes brought about by the COVID-19 pandemic have sparked a mindset shift for European corporate tax managers, as they reconfigure operating processes, departmental structures and accelerate new technology implementation to ensure business continuity amid their ongoing challenges.
The newly published 2020 Thomson Reuters European Corporate Tax Managers Survey seeks to shed light on what they are going through, the challenges that lie ahead, and how they can best turn those challenges into opportunities. The survey also explores the tax function’s place within the corporation, the department’s evolving structure, as well as tax managers’ top-of-mind regulatory concerns, and the skills and technology that tomorrow’s tax leaders must possess.
Key findings in the 2020 Survey Report, administered to 350 professionals from Austria, the Benelux countries, Germany, Ireland, Spain, Switzerland, and the UK include:
Ongoing expected changes in tax reporting have been a bit alleviated by COVID-19 delays (e.g. for the OECD’s Base Erosion & Profit Shifting Treaty; the EU’s DAC-6 directive on cross-border tax arrangements, and the UK’s Making Tax Digital and Brexit), but have collided with radical immediate changes in working arrangements and with business continuity problems caused by the pandemic, as well as with new regulation challenges such as temporary changes to VAT rates in Germany, Ireland and the UK. For example:
- Over half of surveyed corporate managers (53%) say the global economic environment is front of mind for their organization, while 46% see the domestic economic situation to be of pressing importance. The geopolitical environment, meanwhile, is front of mind for 43% of organizations.
- Businesses are still concerned about longer-term issues, especially trade-related disputes (Brexit, US vs China, etc.), transitioning to new tax technology (RPA, AI) and digital tax reporting initiatives.
- Immediate challenges are helping some businesses overhaul their processes now, but COVID-19 is forcing others to wait.
- Tax departments feel more on top of their people-management than their tech-management; managers are looking for guidance in this transition.
- Consequently, tax departments feel more ready for next year’s tax season than the current FY 2020.
Digital tax reporting is driving businesses towards new technology, as rule makers are phasing in mandates for built-in automation and analytics. (Case in point: Tax technology was the biggest priority for increased spend (29%), closely followed by adding talent (26%).)
- Also driving the transition: a need to be closer to other business functions and an increasing need for data visibility within the organization
- Especially important business partners for the in-house tax department are: the IT structure (identified by 73% of survey respondents), changes in operating business (72%), and new/updated product launches (72%).
- Tools are increasingly more powerful and useful – offering opportunities to automate repetitive low-value tasks and allowing skilled professionals to focus on higher-value strategic work.
- Managers see technology skills as crucial for the next generation of tax leaders.
- Ramp-up to greater in-house tax management agility gets steeper the longer an organization waits.
Brian Peccarelli, Thomson Reuters chief operating officer, Customer Markets, noted that, “By taking a holistic view of end-to-end tax management, companies in the remote-working environment increasingly are viewing automation as a key driver in process change, with compliance software and document management tools – such as our ONESOURCE platform – being used to replace manual processes.”
Thomson Reuters Institute’s first-ever annual survey of European Corporate Tax Managers was conducted in April-May 2020 with respondents from a wide mix of businesses including consumer products, healthcare, life sciences, professional services, retail, manufacturing, financial services, plus ten in-depth interviews with senior tax executives. The full report can be downloaded here: https://tmsnrt.rs/2HUqJ0x ; it is also available in PDF format for reporters.
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Mark D. Harrop
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