Corporate tax departments are having a hard time finding and retaining talent with the right skills, and using the data they have available.
Over half of Fortune 500 corporate tax departments aren't making use of their tax data to prepare for various scenarios, including M&A, audits and predictive modeling, according to a new
The Big Four firm surveyed 300 C-suite leaders at companies valued at $1 billion or more, and found they're not truly leveraging tax data to help align with environmental, social and governance strategy (68%), prepare for or respond to audit inquiries (64%), inform decision-making for M&A (65%), inform overall business strategy (60%), or do predictive modeling (56%).
One of the main problems has been finding and keeping talent, with 79% of the respondents saying it has been difficult to retain tax talent this past year, while 53% indicated it has been difficult to recruit talent with the right skill set. Fewer of the C-suite executives polled said they're willing to outsource or co-source their tax department in 2022, at 43%, compared to 65% in 2021. Instead, 48% are more inclined to upskill employees, an increase of 12 percentage points from 2021. To bring in new tax talent, 49% of the respondents said they're changing the educational requirements for recruits this year, compared to 41% last year.
"The big takeaway, to sum it up, is change," said Greg Engel, vice chair of tax at KPMG, during a Twitter Spaces event Wednesday. "It just seems to be the continual amount of change we've seen in tax departments at companies. It's both what's happening with the tools and the skills of their teams, the demographics of their teams are changing, and then we've got a lot of challenges in the marketplace with tax reform and ESG and a number of outside influences causing the tax departments to really think about where they're headed and what they need to do with their tools and their people."
Nearly half the respondents (46%) this year ranked coding as the top skill needed to ensure today's tax department stays competitive, compared with 28% in 2021, while 70% ranked scaling technologies such as cloud, data analytics and visualization as the most relevant for tax talent to know and use. Two-thirds (66%) of the respondents ranked emerging technologies such as artificial intelligence, blockchain, metaverse and quantum computing as the second most important, followed by an understanding of spreadsheets and databases at 58%. Most leaders (57%) still prefer to hire tax professionals who are able to learn technology as opposed to tech professionals who can learn tax.
"There's an overriding message that a skills gap within our tax profession is emerging," said Brad Brown, chief technology officer for tax at KPMG. "I think this is driven as we're starting to see the role of technology taking center stage. The C-suite is really struggling not only to find talent but to find the right skills within that talent."
Corporate tax departments are also investing in more diverse hires, with a slight 54% majority of survey respondents setting goals for outreach to underrepresented groups in 2022 (up 8 percentage points from 2021), and a similar 55% majority indicating their organizations are recruiting from nontraditional colleges and universities this year (but that's up 10 percentage points from 2021). Meanwhile, an 83% majority of the respondents are seeing more female candidates and hires join the profession compared to previous years, while 72% are noticing more candidates and hires coming from underrepresented groups.
Despite the recruiting challenges, companies aren't necessarily willing to bring in outside help to deal with their tax obligations.
"One of the things that really stood out for me was the C-suite's willingness to outsource or co-source their tax department year over year," said Rema Serafi, national managing partner for tax at KPMG. "One thing is clear: The Great Resignation did not spare our profession in the consulting industry nor did it spare tax departments. The fact is that corporate tax departments are still facing a significant talent dilemma. Even though more than two-thirds of the respondents had difficulty retaining talent in the past year, and 81% are seeing less talent join the profession overall, we still saw year over year a 22% drop over 2021 in the C-suite's willingness to outsource or co-source."
