An Ernst & Young survey of 1,600 tax and financial professionals found that 96 percent of businesses are transforming their tax and operating models, whether by building their own capabilities, outsourcing key functions to
third-party vendors or some combination of the two. These professionals came from 32 jurisdictions and 18 industries. 

Respondents to the survey spoke about specific pressures that their businesses are facing:

• 51 percent of leaders said they struggle with motivating talent and avoiding burnout.

• 48 percent said that the lack of a sustainable plan for data and technology is the biggest barrier to achieving their vision
for a modern tax and finance function.

• 90 percent said that they expect moderate to significant changes to their business operations as a result of the
implementation by governments of global minimum tax rules developed by the Organisation for Economic
Co-operation and Development (OECD)/G20 Inclusive Framework, but only 30 percent have completed an impact assessment. 

• 75 percent said that they plan to reduce the costs of their tax and finance functions over the next two years. Generally
speaking, they reported an average two-year cost reduction ranging from 4 to 9 percent in each of the four EY surveys, including the newest one.

Respondents also spoke about a growing pressure to provide the data that companies need to meet their environmental, social and governance (ESG) and sustainability objectives and obligations, including voluntary disclosures of tax information to the public. Twenty-eight percent said that their organization is at an “advanced” stage of their ESG journey.

As a result of these pressures:

• 95 percent of respondents said they’re more likely than not to co-source tax and finance operations in the next two years, an increase from 81percent and 73 percent in 2022 and 2020, respectively.

• Respondents making changes identified co-sourcing with a provider with significant capabilities in data, technology and a shared services center delivery model as their top priority.

• 49 percent of the respondents said that tax planning as a way to drive cash flow is “very important.”

Dave Helmer, EY global tax and finance operate leader, commented in the report, “There is considerably more change coming than I can think of for a long while. The good news is that companies that have gravitated toward transformation, including co-sourcing, are feeling slightly less pressure because they have many of the data collection, platforms, technology tools and/or processes in place to facilitate what lies ahead. Still, the pressure will never completely go away, so it’s more important than ever to have a plan for the future."

In the report's conclusion, "What businesses should do next," EY recommended that any business making a new five-year plan for its tax and finance functions do the following:

• Adopt a strategic view around talent.

• Also, review strategy around working with other functions on a comprehensive technology strategy that can integrate with new advances that are coming, especially generative artificial intelligence.

• Determine how to identify, evaluate and implement regulatory, legislative and transparency initiatives, especially those related to global minimum tax requirements implementation in the coming years.

• Seek to ensure that tax and finance functions do an even better job of being tied to business change overall.

• Make space for tax and finance functions to play a principal role in the organization’s sustainability strategy.

• Find the right balance of internal and co-sourcing arrangements to solve all of these challenges.

“As a company, you need a view on how you’re going to pull all these pieces together,” Helmer said, in the report. “You need this plan to have accurate compliance and drive value in the organization, and you need to do it in an efficient way.
Transforming tax and finance functions into critical and trusted business advisors is well worth the investment.”

"We've seen a real dramatic uptick in companies looking to co-source data-driven and rules-based activities in the last two years," Helmer told Accounting Today.

With regard to the findings about changes as a result of global minimum tax rules, Helmer told Accounting Today, "It is interesting that 90 percent of them expect a moderate to significant impact on tax planning strategies and business operations. A lot still needs to happen legislatively, but when you score moderate or significant, that stands out."