A new report indicates that while corporate tax departments are gradually gaining more strategic relevance within their organizations, efforts to change tax functions’ traditional compliance role are often complicated by competing priorities and a lack of essential resources
Key findings:
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Tax departments gaining strategic relevance — Corporate tax departments are gradually gaining more strategic relevance within their organizations; however, their efforts to move beyond traditional compliance roles are often hindered by competing priorities, tight budgets, a chronic talent shortage, and the challenges of upgrading to new technologies.
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Departments cite top priorities — The top priorities for tax leaders in 2025 include improving tax compliance accuracy, navigating uncertainty, keeping up with new tax legislation, adding tax technology tools, and automating more processes to counter what many see as a lack of resources and qualified staff.
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Adoption of new technologies is key — The adoption of new technology solutions, including automation and AI, is on the rise. While many companies are still transitioning from legacy tech systems, a significant number of tax departments plan to introduce more technology and automation in the coming year.
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Corporate tax departments have been trying for years to move beyond what many in upper management see as simply a compliance role. Now, tax function leaders are seeking to redefine their departments as a source of more strategic, proactive intelligence that can add value to their organizations. New tax technologies, automation, and more centralized data management have certainly given tax departments the means to become more strategically relevant, but progress toward that goal has been slower than many expected.
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2025 State of the Corporate Tax Department
Indeed, according to the 2025 State of the Corporate Tax Department Report, published by the Thomson Reuters Institute and Tax Executives Institute, many well-intentioned corporate tax departments are still navigating through a familiar maze of organizational obstacles, including tight budgets, a chronic talent shortage, and the challenges of upgrading — and adapting to — new technologies and systems.
In addition to various internal struggles, the report also explores how the volatility and unpredictability of today’s political environment is affecting tax leaders at some of the largest companies in the world.
Priorities and challenges
The report surveyed more than 250 senior decision-makers in corporate tax departments worldwide to gain insight into tax department leaders’ strategic priorities and most pressing challenges, as well as their views on technology, resources, budget, and staffing.
According to the report, tax leaders’ top priorities have not changed much in the past few years, with this year’s top priorities including: tax compliance, tax planning and strategy, keeping up with new tax legislation, adding tax technology tools, and automating more processes.
Not surprisingly, survey respondents cited numerous challenges to achieving these priority goals. And while familiar challenges — such a chronic talent shortage and ever-changing regulations continued to make the list — one factor vaulted to the top this year, navigating the market uncertainty caused by shifting political alliances, fluctuating tariffs, and changes to the United States tax code.
The report emphasizes that uncertainty about tariffs, trade routes, tax regulations, filing rules, and supply-chain security has emerged as a major concern. This is especially true for tax professionals within large multinational corporations, whose departments are currently engaged in an urgent push to understand how these complex geopolitical factors might impact their respective enterprises around the world and what they can do about it.
Also not surprisingly, another top challenge was managing digital transformation, which includes the complex process of implementing new systems, tools, and processes, including automation and AI. According to the report, a majority of tax professionals say their companies (70%) are still navigating the transition from legacy systems and processes to more centralized, automated systems that give departments the time and tools they need to engage in more proactive tax management.
While adoption of new technologies is on the rise, more than half of this year’s survey respondents say their departments plan to introduce more technology and automation in the coming year with more than half saying their department’s new technology would include generative AI.
Moving toward a more strategic and proactive stance
Another major theme explored in the report is the ongoing effort by tax professionals to do less tactical or reactive compliance work and more strategic and proactive data analysis and forecasting. Currently, tax professionals say they are spending more than half their time on tactical and reactive work but would prefer to spend less.
This desire to spend more time mining business intelligence from tax data has been on many tax departments’ wish list for several years. In most cases, however, a department’s ability to free up its tax professionals to devote more time to proactive pursuits is directly tied to the available resources. Yet, resource scarcity continues to be a thorn in the side of many departments, with 58% of respondents claiming that their department is under-resourced, up from 51% in 2024.
To address their resourcing issues, many departments are pursuing a three-pronged strategy, the report notes, that includes incorporating new technologies, hiring more qualified tax professionals, and outsourcing a portion of routine compliance and audit functions.
Interestingly, the report reveals that the tax professionals most likely to report that their departments are not under-resourced are those from smaller companies (those with less than $50 million in annual revenue) and larger companies (those with more than $1 billion in annual revenue).
Meanwhile, midsize companies are the ones most likely to struggle with resourcing issues, the report shows, due mainly to less robust budgets, complex infrastructure issues, and something of a wait-and-see attitude toward adopting more advanced automated technologies. However, the report also notes that many midsize companies are also in the midst of technological transitions that should put them in a more advantageous position within the next year or two.
You can download
a full copy of the “2025 State of the Corporate Tax Department”, from the Thomson Reuters Institute and Tax Executives Institute, by filling out the form below: