How tax can execute its key role in business strategy

In today's rapidly evolving business landscape, tax executives are increasingly recognized as essential players in strategic business decisions. PwC's inaugural Global Reframing Tax Survey sheds light on the critical role of tax in business strategy and the challenges faced by tax functions worldwide. The survey, which draws on responses from 1,205 executives across 47 countries, reveals a picture of tax functions stretched to capacity by complex compliance obligations, resource constraints and a deluge of data.

Yet tax functions often face considerable resource constraints, making it difficult to simultaneously contribute to strategic business decisions and meet day-to-day operational needs effectively. To address this challenge, Canadian respondents were more likely to add headcount to the tax function as compared to their global counterparts, who looked more to external help for business-as-usual responsibilities. This underscores the need for Canadian tax executives to continually evaluate how they can best deploy a mix of internal and external tax resources to tackle ever-increasing tax compliance and reporting requirements while reinforcing the tax function’s powerful contributions to business strategy and reinvention.

External support can take a variety of forms, including outsourcing and managed services. Many organizations are already working with external advisors to manage the complexities of new regulations and technology, which Pillar Two and its comprehensive data requirements have dramatically accelerated. Our survey found 75% of Canadian respondents plan to increase their use of external support for tax compliance and reporting in the next three years. Within this increase, we’re seeing a shift from a binary model of either fully in-house or outsourced to a flexible spectrum of options that allow tax executives to select the best solutions based on their resource availability and strategic priorities. 

In looking at the business case for external support, respondents highlighted several benefits, including access to new skills, multidisciplinary capabilities and technology. Canadian respondents also emphasized the importance of external support when dealing with tax authorities. This aligns with the findings from our Global Tax Controversy and Dispute Resolution Survey, which found 94% of businesses use external advisors to assist with their interactions with tax authorities.

A significant finding from our Global Reframing Tax Survey is the widespread talent challenge in tax functions. An overwhelming 98% of Canadian respondents report a significant skills gap, with artificial intelligence (AI), specialized tax expertise and data analysis ranking among the most critical skills needed. Despite recognizing the challenge, less than one-third of respondents are addressing it through upskilling existing employees. Providing staff with opportunities to learn new skills can do more than help employers close talent gaps. Our 2024 Hopes and Fears Survey found that such opportunities also influence employees’ decision to stay with their current employer or switch to a new one. Senior tax executives that review their team's current skills and pinpoint gaps through a comprehensive skills assessment have an opportunity to invest in targeted upskilling programs in areas such as generative AI (GenAI) and data analytics or bring in new talent with non-tax skills that complement the technical experience of their existing teams.

GenAI is already making waves in the tax function, with the majority of respondents reporting tangible benefits from its use. However, our survey shows that Canadian respondents are less likely to use GenAI to the same extent as their global counterparts. Those respondents that do use GenAI say they’re seeing significant benefits, notably in analyzing qualitative data, automating data entry and generating tax reports.

PwC’s Global Reframing Tax Survey highlights the transformative potential of the tax function in today's business environment. As companies work to manage the impact of new US tariffs and trade policies, the tax function will play a pivotal role in helping their organizations reinvent their business models, including by unlocking cash and maximizing the value of tax credits and incentives. At the same time, the tax function can further help their organizations weather a potential economic downturn by finding operating efficiencies that control costs.

By addressing skills gaps, harnessing AI and automation and rethinking operating models, tax executives can navigate complexity and deliver strategic value to their stakeholders. As organizations continue to transform, tax must be at the table to inform strategic decisions and enhance operations.