Corporate tax departments are under increasing pressure to adapt to fast-moving regulatory changes, and many are doing this by leveraging technology, which empowers teams, and allows for agile execution
SEATTLE — Today’s continuously changing regulatory environment put corporate tax departments under a feeling of constant pressure by requiring them to keep their organizations compliant while managing increasing global complexity with less resources (both budgetary and with their shrinking workforces). Not surprisingly, conversations around technology in the corporate tax space has moved from a nice to have to an absolute necessity now. Despite this pressure and urgency to act, however, a recent panel underscored how a thoughtful approach to technology needs to be the driving force behind any technology transformation.
At a recent technology seminar sponsored by Tax Executives Institute (TEI), industry experts offered their insights on how corporate tax departments should approach leveraging technology and bringing their teams along for the journey.
Start with vision, not just tools
For most organizations, the journey into technological transformation starts by looking at the latest technology and software. However, a more strategic approach might be to start by reframing how your tax department operates and how they want to do tax work differently. This include looking at all processes and determining what works or what simply no longer does. This step is important because it avoids the expensive and demoralizing trap of getting new technology then retrofitting it into old and possibly outdated existing work processes, often resulting in a big letdown when things don’t improve.
More positively, taking the step of thinking about how your department also empowers teams to rethink workflows entirely.
After analyzing how the department works, the next step would be to define what new roles would be needed for the kind of work the team wants to do. Again, this approach brings the team along on the transformation journey by not only having them think about how they want to work differently, but also what other skills and professional expertise the team may need.
As the TEI panel stressed, no transformative initiative can succeed without the right people behind it — and the right people are simply those with a growth mindset who are curious, resilient, and open to change. Corporate tax department leaders must consciously exhibit and foster a culture that embraces risk-taking and continuous learning — and most importantly, they most model this behavior themselves.
Taking the step of thinking about how your department also empowers teams to rethink workflows entirely.
Among the panelists, a key recommendation was to set aside dedicated “future of work hours” as part of employees’ annual goals. These hours, used for training and innovation, serve a dual purpose: They both equip staff with the skills needed to adopt new tools, and they also signal leadership’s commitment to long-term development. Such investment not only improves performance but also boosts talent retention — a critical consideration as demand for tax technology talent grows.
Building a tax tech roadmap
With people on board and in place, the next step is creating a tax technology roadmap. This roadmap should detail both short-term priorities and long-term goals, while being flexible enough to accommodate the inevitable changes that will arise.
As the roadmap is developed, it’s important to document decision-making along the way. For example, capturing the why behind how a certain tool or tech was chosen, or what data helped inform a particular process change are critical aspects of decision-making to consider. Capturing this information provides clarity when reviewing the plan months or year later; and it also provides continuity if team members change or if the strategy needs adjustment due to evolving business needs.
Of course, central to any modern tax function is a well-organized and accessible repository of data. Enter a data lake for tax data — a centralized platform that aggregates structured and unstructured data from across the organization. With proper governance, a tax data lake enables advanced analytics, real-time reporting, and automated compliance processes.
However, building and maintaining this resource for the tax function requires close collaboration with an organization’s IT and other departments. It also demands attention to data quality, standardization, and security. Yet, by investing early in the right data architecture, tax teams can future-proof their operations and more readily respond to regulatory demands.
To be clear, one of the biggest barriers to such a level of transformation is a lack of resources — both in terms of budget and time. To make the business case for investment, tax leaders need to become storytellers, the panel said, adding that leaders need to be able to articulate to management not just how the technology ensures compliance but also how it drives strategic value. This might require the team to quantify any time savings, risk reduction, and their improved response time to regulatory and legislative changes.
For most organizations, the journey into technological transformation starts by looking at the latest technology and software. However, a more strategic approach might be to start by reframing how your tax department operates and how they want to do tax work differently.
It’s also essential for tax department leaders to align their departments’ transformational goals with broader enterprise objectives. When tax departments show how their initiatives support the company’s digital strategy, they are more likely to gain necessary executive sponsorship and funding.
Collaboration is key
Finally, an organization’s tax function cannot transform itself in isolation. Strong relationships with IT, finance, legal, and other functions are critical for success. This means that cross-functional teams should be involved from the outset to ensure alignment and avoid siloed solutions. These partnerships also help tax teams stay ahead of upcoming changes — whether it’s a new ERP implementation, an acquisition, or a shift in global reporting requirements.
Further, agility must be a core principle of any tax technology strategy. Regulatory environments evolve rapidly, and tools and processes must be designed with such change in mind. Rather than seeking perfect solutions, tax departments should focus on building flexible systems that can adapt over time. And this includes using modular technology, piloting new solutions on a small scale before full deployment and staying engaged with industry peers to learn from their experiences. By embedding agility into both mindset and operations, tax teams can better weather uncertainty and seize new opportunities as they arise.
Beginning the journey
The path to responding effectively to regulatory change is not paved solely with new technologies, but with intentional planning that empowers teams and allows for agile execution. Corporate tax departments that embrace this holistic approach — focusing on vision, talent, data, and collaboration — will be well-positioned to navigate the complexities of today’s regulatory landscape and emerge stronger on the other side.
The technological transformational journey may be challenging, but with the right roadmap and commitment, it becomes not just manageable, but a catalyst for lasting strategic advantage.
You can learn more about the challenges facing corporate tax departments here
