EY Tax survey shows ripple effect of federal tax reform
Now that federal tax law changes are in place, the 13th Annual EY Domestic Tax Conference survey shows that state tax is drawing the attention of corporate tax leaders. Among respondents, 78% anticipate either a patchwork of changes or new ways to decouple from state issues caused by federal reform. Depending on how each state conforms to the new tax code, the economic impact and the way specific provisions are implemented at the federal level, states may choose not to conform to federal provisions that reduce corporate tax rates.
Other Distractions
Amid the tax compliance and planning challenges from tax reform, two-thirds (66%) of respondents are also preparing for M&A activity in 2018. Among them, 69% need to make changes to tax planning and the tax function.
Despite talk on Capitol Hill of a potential phase two for tax reform, more than half of the respondents (64%) will wait and see if future changes will substantially affect their company’s tax situation, and 15% hope it will provide greater clarity on some ambiguous issues in the current law.
Teaming and Technology to the Rescue
To address the volume and pace of change, 23% of respondents said they are adding outside resources to supplement their team and technology.
“Technology and innovation are constantly changing the way tax operates, collaborates and interfaces with outside support services or tax authorities,” said Barton.
Overall, 64% of respondents say they are using new technologies as they seek efficiency, accuracy and consistency of administration or classification of assets or transactions. Most of those companies (89%) focus on one type of innovation at a time, though combined efforts can be found:
- Advanced Data Analytics: used by 84%
- Robotic Process Automation: used by 37%
- Machine Learning: used by 9%
- Other Artificial Intelligence: used by 13%
Last year, almost 40% of organizations were investing in new tax management platforms (18%) or new enterprise-wide systems that make the tax function more efficient (22%). That trend continues, with a slight shift in 2018. Thirty percent are still investing in new tax technology, but another 8% are choosing to outsource most of the work that requires the latest innovations. Even among companies that want to develop their own capabilities, 54% use outside services to develop or help develop them.
Barton noted, “The challenge of developing and managing ever-changing applications doesn’t pay off for every company, particularly those who want to collaborate and share data as part of a managed service agreement anyway.”
About the survey
The 444 respondents represent senior tax practitioners that participated in the EY 13rd Annual Domestic Tax Conference survey.
Asia Pacific Tablet Market Records 12.9% Growth in 2021 Driven by Pandemic Demand: IDC
April 20, 2022
India’s Smartphone Market Expected to Recover in the Second Half of 2020 After a Steep Decline in the 2Q2020: IDC India
August 11, 2020