Much of the public and media attention we see in the tax world is focused on the needs of governments to fill their revenue gaps. There is growing concern that US headquartered businesses have become targets in this environment. Concurrently, they now face more demanding and complex global reporting requirements with fewer resources at their disposal.
Our latest US CEO Survey finds US CEOs in agreement. They are almost universally worried about a rising tax burden and rank a country’s tax system as a top consideration when determining overall investment strategy. However, in stark contrast to their global counterparts, US CEOs are split when asked if their company’s leadership is involved in their tax planning and if that tax strategy is linked to company reputation. Besides agreement on tax policy as a top consideration, CEOs agree that data and analytics are key to driving business growth and view the pace of technological change as a challenge.
What does this mean for the Tax function of the future? See below for key findings of significance for tax functions from our 2016 US CEO Survey.
Denise Morrison, President and CEO of Campbell Soup Company
The current US tax burden for US multinationals is already very high – the US corporate rate is highest among OECD countries. American companies, unlike those of almost every other developed country in the world, are subject to taxation on their earnings around the globe. Yet almost 9 in 10 US CEOs are concerned about an increasing tax burden, up from 76% last year.
So why do US companies, already among the highest taxed in the world, worry about even more taxes in their future? Is it the country’s long-term fiscal imbalance and the presumption that at some point corporations will be asked to pay more to help balance things out? Is it the increasing global focus on tax paid by US multinationals – most acutely in Europe? Or is it all of these things?
Our Tax Policy Leader Rohit Kumar examines these issues and how companies can battle the headwinds in his latest blog post. If you want an even deeper dive into the tax issues that keep CEOs up at night, download our2016 Tax Policy Outlook for our analysis on the top tax issues facing the Obama Administration and Congress in advance of the November 8 elections.
As countries around the world implement the OECD’s Base Erosion and Profit Shifting (BEPS) initiative, companies are finding that detailed country-by-country tax and financial information is likely to become visible to many eyes – and not just those of tax authorities. New reporting requirements for larger companies translates into larger volumes of disclosed data, much more than companies currently report worldwide. CEOs around the world will find themselves in a new world that demands more transparency about their tax affairs.
It was interesting to find that US CEOs are much less concerned about the impact of this increased transparency on their business: only 40 percent of US CEOs versus 71 percent of those globally say tax strategy and transparency affect their reputation. This may be due to the fact that US corporate taxes have not yet been the subject of as much sustained press coverage and political controversy as has been the case in some other countries. Instead, there is bipartisan acknowledgment that the US tax system is broken and needs reform for US companies to be competitive globally.
Download our 10Minutes on BEPS piece to learn more about these new transparency initiatives and their impact on your business.
To meet today’s increased internal and external challenges, companies are re-evaluating their Finance operations, processes, technology and personnel in order to achieve transformation. It is critical for Tax to be an integral part of these initiatives from the outset and have a seat at the table.
However, when it comes to the role of company leadership (specifically the board) in tax planning, US CEOs are split – sending the message that Tax is not always seen as a vital component in company transformation. We believe a stronger collaboration between a company’s board and its Finance and Tax executives is critical and can help to better align costs and capabilities with the business strategy.
The bottom line is that companies that omit Tax during the Finance transformation process can miss out on an opportunity to reap the full benefit of their efforts. Don’t make that mistake. For more details, read one of our latest pieces in the Tax Function of the Future series, Tax as a critical component in every Finance Transformation.
Tax functions face increasing pressure to remain compliant in a world of challenging data collection and manual processes, leaving Tax little time to focus on strategic planning. But CEOs believe their companies are getting better at creating value from data and analytics. They’re seeing smarter use of data and better delivery of the right information at the right times.
Almost 75% of US CEOs say data and analytics are key to driving growth, saying they see the greatest returns on engagement when their companies use analytics. Streamlining data collection and management process is key for the tax function to shift its focus from gathering data, to analysis and adding the value needed to participate more strategically within the organization.
Data is the new business currency, download our Unlocking data and analytics Tax Function of the Future piece to find out how companies can cash in.
Watch our specialists Andy Ruggles, Rob Baldwin and Dan DiFilippo explain how actionable, data-driven insights can lead to extraordinary results and how to:
• Navigate regulations and compliance
• Better understand your data
• Access and organize the data
• Create the highest value insights
Tax continues to be in the spotlight, but the tax function of today is not designed for the regulatory, data, people and process demands of tomorrow. The need for continuous transformation is immediate and US CEOs agree, with almost 80% of US CEOs saying they’re concerned about the pace of technological transformation.
So how does the tax function get ahead and find ways to bridge the gap between their current capabilities and the future reality? Our Tax Function of the Future series explores predictions impacting tax.
US Deputy Tax Leader & Washington National Tax Services Leader
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Partner, TRS/Global Compliance Services
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