Outsourcing is Becoming More Popular Among Corporate Tax Executives

The majority of chief tax officers surveyed recently by Big Four firm KPMG said they are turning to some form of outsourcing or cosourcing to help navigate talent and skill shortages in their tax departments.

According to KPMG’s 2023 Chief Tax Officer Outlook, more than eight in ten (83%) CTOs plan to use targeted/strategic outsourcing, cosourcing with one or more advisors, or managed service alliances within the next three years.

KPMG surveyed 300 CTOs at large public and private U.S. companies in fall 2022 for its fourth annual report on how they are leading their organizations’ tax functions through a period of great change. Ninety percent of CTOs came from companies with $2 billion or more in revenue. They represented all major industries, with the largest groups coming from banking and finance (7%), conglomerates, engineering and industrial products, and metals (7%), and retail (6%).

The top benefit that CTOs expect from shifting to a more aggressive outsourcing or cosourcing strategy is addressing the problem of attracting and retaining in-house talent (52%).

According to KPMG, some CTOs use outsourcing to deal with more complex areas of tax that require specialized subject-matter expertise. Outsourcing time-consuming compliance processes can also assist tax departments in overcoming human resource shortages, particularly in foreign jurisdictions where tax may lack local personnel and expertise.

According to KPMG, cosourcing can provide comparable benefits while allowing the tax department to retain more control.

“The change that chief tax officers must grapple with is rapid, relentless, and coming from all directions,” said Greg Engel, vice chair for tax at KPMG LLP. “It makes perfect sense for CTOs to ramp up their interest in outsourcing models given the current economic, regulatory, and talent environment. In fact, it’s best practice for companies to periodically reassess their need for these models to address changing dynamics in the market and equip themselves with the right resources to compete and succeed.”

Source :cpapracticeadvisor.com

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