Key takeaways:

• • • Advocate for investment in technology and talent 鈥� As compliance and strategic demands grow, tax departments should use benchmark data from industry reports to build compelling business cases for automation, generative AI, and additional headcount.

    • Explore transferable tax credit opportunities 鈥� The transferable tax credit market has matured significantly, more departments should pursue these to offset tax liability, reduce estimated quarterly payments, and free up cash flow.

    • Proactively manage the OB3 transition 鈥� The One Big Beautiful Bill Act introduces substantial federal tax changes requiring strategic planning for 2026. Document analysis carefully as state conformity issues create future audit exposure.

The corporate tax landscape in 2025 is defined by resource constraints, regulatory complexity, and rapid technological change. And many corporate tax department leaders face mounting pressures from compliance demands, talent shortages, and evolving legislation 鈥� all while being asked to deliver more strategic value to their organizations, according to the , published by the 成人VR视频 Institute and Tax Executives Institute.

Under-resourcing and strategic gaps persist

Perhaps the most striking finding from the 2025 report is that 58% of corporate tax department professionals said their departments are under-resourced 鈥� an increase from 51% who said that the previous year. This apparent deterioration in resourcing creates cascading risks for businesses. Departments facing resource constraints report higher rates of penalties and audits, with 44% of survey respondents saying their under-resourced department experiencing penalties in the past year and 12% saying it had faced penalties exceeding $1 million.

The good news is that more departments are planning to hire rather than rely on overtime from existing staff, the report shows. However, the talent pool remains tight, making recruitment challenging. For tax department leaders, advocating for investment in both talent and technology is essential for risk management and maintaining compliance.

For tax department leaders, advocating for investment in both talent and technology is essential for risk management and maintaining compliance.

The report also showed that corporate tax departments continue to struggle with an imbalance between strategic and tactical work, with in-house tax professionals noting that they spend the majority of their time on reactive, tactical tasks while ideally wanting to reduce this to approximately 30% to 38% of their time.

What’s holding teams back? Excessive workload volume tops the list, they said, followed by complex compliance requirements, limited resources, and outdated technology. While two-thirds of respondents said their departments are still in the chaotic reactive stage of technology maturity, more than half said they expect higher-than-normal budget increases for investment in tax technology in the coming year, with many beginning to incorporate generative AI (GenAI) into their workflows.

Opportunities to create value exist

While these challenges exist, there are ways that corporate tax departments can identify and pursue value in the coming year. For example, the passage of the One Big Beautiful Bill Act (OB3) in mid-2025 introduced substantial changes to federal tax provisions including the ability to immediately expense research and experimentation costs under Section 174, reintroduction of full bonus depreciation, and liberalized interest deduction limitations.

The new Section 904(b) rules significantly improve the foreign tax credit mechanism by eliminating the allocation of interest expense and research and experimental (R&E) expenses to foreign source income, potentially lowering effective tax rates from 18.9% to approximately 14% at the aggregate level.

Departments that invest in technology, build strong business partnerships, and track their value contributions are demonstrating that having a strategic impact is possible even in resource-constrained environments.

However, OB3’s retroactive application to tax year 2025 creates immediate compliance complexity. State conformity issues compound the challenge, as many states have not yet updated their codes, creating potential mismatches between federal and state taxable income calculations.

Further, the transferable tax credit market has matured significantly, with nearly 25% of Fortune 1000 companies now participating, which is a 60% increase over 2024. Current market conditions favor buyers, with investment tax credits and production tax credits trading at discounts of 89-cent to 91-cents on the dollar.

These credits can offset tax liability, reduce estimated quarterly payments, and free up corporate cash flow. Tax departments should explore this opportunity as another tool for creating measurable value for the business.

Planning for 2026 and beyond

Despite the challenges facing corporate tax departments in 2025, success stories abound. Departments that invest in technology, build strong business partnerships, and track their value contributions are demonstrating that having a strategic impact is possible even in resource-constrained environments. The key is making the case for investment, staying ahead of regulatory changes, and continuously communicating your added value back to the business.

You can download听a full copy of the听, from the 成人VR视频 Institute and Tax Executives Institute, here

Key takeaways:

• • • Invest in your data before adopting AI 鈥� Without clean, organized, and accessible data, AI solutions will not deliver the desired results.

    • People are the ultimate differentiator 鈥� Fostering curiosity and continuous learning are essential for tax professionals to thrive in the AI era.

    • Successful AI integration requires commitment to change 鈥� Transparent change management and a willingness to experiment can help build trust and buy-in across the tax team and the organization.

SAN FRANCISCO 鈥� As corporate tax departments continue to undergo AI-driven technology transformation, industry leaders gathered at the recent to discuss how tax professionals can successfully navigate this new era. Their insights crystallized into three essential takeaways that all corporate tax teams should consider as they embark on their AI journey.

1. Data is your new currency

The first and most critical takeaway was simple: Data is your new currency, and you must invest in it before you invest in AI. Most tax departments are starting the conversation around what AI tools they need to buy, with all the talk being about efficiencies and how AI can help. Indeed, many organizations are rushing to implement AI solutions without first ensuring that their foundational data infrastructure is sound. The result is often disappointing 鈥� garbage in, garbage out, as the old saying goes.

The tax function of the near future will face increasing demands for real-time information from tax authorities around the world. For systems and data that aren’t clean, organized, and accessible, implementing AI may not only fail to solve the problems it was employed for but possibly exacerbate them. Before deploying any AI solution, tax departments must ask themselves critical questions, including: Do we have a single source of truth for our data? Is our data structured in a way that AI can effectively process it? Can we trust the accuracy and completeness of our information?

The message is clear: You should pause before rushing into AI implementation. Audit your data landscape and identify gaps, inconsistencies, and quality issues. Invest the time and resources necessary to create a solid data foundation. This groundwork may seem tedious, but it’s absolutely essential for AI success going forward.

2. People are your differentiator

The second key takeaway addresses a common fear about AI, that it will replace human workers. The reality presented at the conference was far more nuanced and optimistic. People remain the ultimate differentiator in tax departments, but the skills that define success are evolving. Curiosity and continuous learning will separate thriving tax professionals from those who get left behind.

Conference panelists explained that AI should be viewed as a tool for augmentation, not replacement. The most successful tax departments will be those that embrace a human + machine model, on in which AI handles the repetitive, data-intensive tasks while humans focus on judgment, strategy, and relationship-building. Tax, after all, is fundamentally about social engineering 鈥� understanding not just the letter of the law, but how regulations are interpreted and applied in real-world contexts. This requires human insight, empathy, and strategic thinking that AI cannot replicate.

However, leveraging AI effectively does require a mindset shift. Tax professionals must become comfortable with technology, willing to experiment, and committed to understanding how AI tools work. This doesn’t mean everyone needs to become a data scientist, but it does mean cultivating genuine curiosity about technology and its applications.

In this way, change management emerges as crucial component in this dynamic. Building trust in AI systems requires taking baby steps and bringing your tax team along on the journey. Transparency is essential 鈥� you must explain what the AI is doing, why certain approaches were chosen, and what the limitations are. When people understand the why behind AI implementation, buy-in follows more naturally.

Leaders should focus on the process, not just the outcomes, panelists said, adding that corporate tax leaders should identify key touch points where AI can create meaningful intelligence without overwhelming the organization. Remember, it’s not about automating everything. Some processes benefit tremendously from AI; others may not. Using human judgment to guide these decisions is precisely the kind of value that distinguishes exceptional tax professionals.

As a tax leader, you should encourage your team to be curious. Create safe spaces for experimentation in which failure is seen as a learning opportunity rather than a career risk. Those tax professionals who will thrive in the AI era are those who approach new tools with enthusiasm rather than apprehension, who ask questions rather than resist change, and who see continuous learning as a professional imperative rather than an occasional activity.

3. Partnership is your strategy

The third critical takeaway recognizes that successful AI implementation within tax departments cannot happen in isolation. Partnership is your strategy, and collaboration across tax departments, IT teams, and external advisors is how organizations will scale AI responsibly and effectively.

Tax departments have traditionally operated with significant autonomy, but the AI era demands that these silos be broken down. Tax professionals bring domain expertise and understand the nuances of compliance, planning, and tax controversy. IT teams bring technical knowledge about infrastructure, security, and integration. And external advisors offer perspective on industry best practices and emerging technologies. None of these groups can successfully implement AI in the tax function without the others.

This collaborative approach should begin before any AI tool is selected. Tax, IT, and external advisors should jointly define the problem that tax leaders are trying to solve. What specific pain points does AI need to address? What does success look like? How will you measure ROI? These conversations ensure alignment and prevent the common pitfall of implementing technology in search of a problem.

Internal audit functions also play a crucial role in the AI journey, particularly regarding risk management and controls. As AI becomes more embedded in tax processes, audit teams need to understand how these systems work, what risks they introduce, and how to verify their outputs. This requires ongoing dialogue between tax and audit functions 鈥� another partnership that’s essential for responsible AI scaling.

The partnership model extends to managing relationships with tax authorities as well. As jurisdictions increasingly demand real-time data and embrace their own specific AI tools for compliance monitoring, corporate tax departments must work closely with legal and government affairs teams to understand evolving requirements and ensure that their organization鈥檚 systems can meet them.

Scaling AI responsibly means implementing appropriate governance frameworks, establishing clear accountability for AI outputs, and maintaining human oversight of critical decisions. It also means being thoughtful about which processes to automate and which to keep human driven. And perhaps most importantly, it means investing in training across all partner groups, so everyone understands their role in the AI ecosystem.

The path forward

The transformation of corporate tax through AI is not a distant future scenario 鈥� it’s happening now. Organizations that embrace these three principles 鈥� investing in data before AI, fostering an environment of curiosity and continuously learning, and building strong partnerships across organizational functions 鈥� will position themselves to thrive in this new landscape. And those that rush ahead without proper preparation or try to go it alone will likely struggle.

The message from TEI’s conference is ultimately one of optimism tempered with pragmatism. As panelists noted, AI offers tremendous potential to make tax functions more efficient, insightful, and strategic; however, realizing that potential requires thoughtful preparation, human-centered change management, and collaborative execution. The future of corporate tax is bright for those willing to do the work.

You can find out more about the work of the Tax Executives Institute here

Key points:

• • • Technological transformation 鈥� SAT is modernizing its auditing with machine learning and graph analytics to detect fiscal risks and tax evasion networks.

    • Greater operational demands 鈥� Taxpayers and accounting firms must adapt to faster, more precise reviews that will be driven by AI.

    • Efficient and preventive auditing 鈥� AI enables SAT to anticipate irregularities, promote self-correction, and maintain effective tax collection at low cost.

In 2024, Mexico鈥檚 tax authority, the Tax Administration Service (SAT), introduced its Master Plan, marking a new chapter in tax auditing. This plan includes the integration of technologies such as machine learning to identify high-risk taxpayers who potentially could be involved in illicit activities. The aim of the plan is to detect complex structures of tax evasion and avoidance through the analysis of transactional patterns and relationships among entities.

Additionally, the plan seeks to uncover inconsistencies in Digital Tax Receipts (CFDI) that may indicate simulated operations, smuggling, or the use of shell companies, thereby strengthening fiscal oversight and the prevention of financial crimes.

This approach relies on large-scale data analysis, with AI playing a central role. Through algorithms that learn from historical patterns, SAT aims to anticipate irregular behavior and act proactively. Indeed, this represents a profound shift in how tax auditing is understood and executed.

Although AI is a major innovation in the field, it鈥檚 not the starting point. Since 2020, SAT has been consolidating its four-pronged strategy, aimed at i) increasing collection efficiency; ii) reducing tax evasion; iii) combating corruption; and iv) improving taxpayer service. This strategy has supported the development of programs such as Compliance Monitoring, Deep Surveillance, and Coercive Collection, which have enabled the authority to act with greater precision and speed.

To better understand the scope of this transformation, certified public accountant Roberto Iv谩n Col铆n Mosqueda, a member of the Mexican Institute of Public Accountants, shares his expert insights on how these tools are redefining tax auditing and what they mean for taxpayers and professionals in the field.

The role of advanced analytics

SAT鈥檚 2024 Master Plan places special emphasis on machine learning to strengthen auditing. This approach is divided into two main models:

1. 1. 1. Analytical techniques, which allow the review of large volumes of data from CFDIs, tax returns, and audit reports. The goal of this is to detect irregularities in real time, especially in sensitive sectors like fuel distribution, where illegal trade and irregular commercialization are targeted.
      2. Statistical learning models, which enable AI to identify previously detected tax evasion patterns and apply them to uncover new networks or similar schemes. This model is particularly useful for identifying operations linked to fake invoicing companies or importers engaged in irregular practices.

The combination of these models allows SAT not only to react to non-compliance but to anticipate it, resulting in smarter, less invasive, and more resource-efficient auditing.

鈥淭he authority has been closing gaps and tightening controls, and the reality is that electronic invoicing now provides highly reliable information,鈥� explains Col铆n. 鈥淏ased on this, along with tax returns and other data it receives, SAT can implement artificial intelligence to develop analytical and statistical learning models that will undoubtedly continue to deliver strong results.鈥�

Direct impact on taxpayers & accounting firms

SAT鈥檚 technological transformation doesn鈥檛 only affect large taxpayers or strategic sectors. It also has direct implications for ordinary taxpayers and the accounting firms that support them.

Indeed, Col铆n warns that this new auditing will be more dynamic and demanding. 鈥淚n the daily life of a regular taxpayer, this will mean increased auditing,鈥� he says. 鈥淭he authority will detect non-compliance and omissions more quickly, which will generate more work for both taxpayers and accountants, who will need to constantly review and correct.鈥�

Additionally, accounting firms must adapt to a more sophisticated auditing process that goes beyond numbers to better analyze relationships between data, behavioral patterns, and connections among taxpayers. This implies greater responsibility in validating transactions, ensuring consistency in reported information, and maintaining traceability of digital tax receipts.

鈥淭hese analytical techniques will allow the authority to detect irregularities more quickly. Today we already see reminders before a tax declaration is due, and invitation letters requesting explanations. With artificial intelligence, this pace will intensify,鈥� Col铆n adds.

Efficient collection and preventive auditing

One of SAT鈥檚 most notable achievements is its operational efficiency. Currently, for every 100 pesos collected, the authority spends only 28 cents, compared with the United States鈥� Internal Revenue Service (IRS) which . This figure reflects a modern fiscal management model based on the strategic use of technology to maximize results with limited resources.

Preventive auditing, supported by AI, allows SAT to expand its coverage without significantly increasing its operational structure. By detecting irregularities before they become serious omissions, it encourages taxpayer self-correction, reducing the need for formal audits and improving voluntary compliance.

This proactive approach not only optimizes government resources but also fosters a more transparent and collaborative relationship between the authority and taxpayers.

Preparing for the future of tax compliance

SAT鈥檚 technological evolution presents new challenges for all actors in the tax system. For taxpayers, it means maintaining more rigorous accounting, staying alert to messages in the tax mailbox, and responding quickly to any requests. For accounting firms, it鈥檚 an opportunity to strengthen their services, adopt analytical tools, and provide more strategic advice to their clients.

Smart auditing works to move revenue services beyond enforcement, enhancing the ability of auditors to prevent, educate, and collaborate. In this new environment, transparency, traceability, and cooperation will be key to building a fairer, more modern, and efficient tax system in Mexico.

You can find out more about the regulatory and legal issues impacting Mexico here

Key findings:

• • • Tax departments gaining strategic relevance 鈥� 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.

    • Departments cite top priorities 鈥� 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.

    • Adoption of new technologies is key 鈥� 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.

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.

Indeed, according to the听, published by the 成人VR视频 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 鈥� and adapting to 鈥� new technologies and systems.

In addition to various internal struggles, the report also explores how the volatility and unpredictability of today鈥檚 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鈥� strategic priorities and most pressing challenges, as well as their views on technology, resources, budget, and staffing.

According to the report, tax leaders鈥� top priorities have not changed much in the past few years, with this year鈥檚 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 鈥� such a chronic talent shortage and ever-changing regulations continued to make the list 鈥� 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鈥檚 survey respondents say their departments plan to introduce more technology and automation in the coming year with more than half saying their department鈥檚 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鈥� wish list for several years. In most cases, however, a department鈥檚 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听a full copy of the , from the 成人VR视频 Institute and Tax Executives Institute, here

Key findings:

• • • AI’s impact on corporate functions 鈥� The vast majority of professionals in various corporate enabling functions 鈥� legal, risk, trade, and tax, audit & accounting 鈥� say they expect AI to have a high or even transformational impact on their work.

    • Many organizations lack a clear AI strategy 鈥� While almost half of professionals say they expect AI to bring transformational or high levels of change within their departments this year, less than one-in-five say their departments have an AI strategy in place.

    • Importance of talent development 鈥� Effective AI deployment requires significant investment in talent, our research shows, with ongoing training and skill development being crucial for maximizing AI investment.

Not surprisingly, AI is the single driver set to have the biggest impact on corporate work over the next five years, according to 成人VR视频 2025 Future of Professionals Report, with 81% of corporate professionals saying that they expect AI to fundamentally alter the course of how their internal functions operate.

Jump to 鈫�

Future of Professionals Report 2025: Actionable insights for corporate leaders

It is not just speculation 鈥� the shift is well underway as more than half (55%) of corporate respondents say their organizations are already investing in new AI tools. This strong involvement indicates a clear understanding that AI has the potential to streamline operations, improve decision-making, and generate significant efficiencies across all departments.

You can download your copy of the 2025 Future of Professionals Report here

However, despite this widespread recognition of the transformative power of AI and the rapid rate of adoption, there are still many corporate professionals that have yet to start thinking about how AI can be integrated into their workflows. Just 19% of respondents said their internal departments have an AI strategy in place 鈥� and that could be a problem for laggard departments. Our research shows definitively that those organizations with well-defined AI strategies are almost four times as likely to see benefits than those organizations without a comprehensive AI strategy.

Without a solid roadmap, even if an organization made large investments in AI, those outlays could become scattered and underused, wasting resources and resulting in missed opportunities.

Clearly, strong guidance is needed for corporate leaders to develop a well-defined AI strategy that will allow them to move their organizations forward in an increasingly tech-driven environment. In this new paper, , specifically tailored to professionals within internal corporate functions, we offer clear steps that department and C-Suite leaders can take to build a framework of AI investment and adoption so their corporate teams can bring demonstrable added value to their organizations by leveraging advanced technology.

This action plan draws from the perspectives of more than 600 professionals within corporate legal, risk & compliance, and tax & accounting departments as well as respondents within global trade and the wider corporate C-Suite. Responses were spread across more than 50 countries around the globe.

Those organizations adopting this holistic approach… will not only survive but thrive, [and] they will redefine professional services, turning functions often seen as cost centers into strategic value drivers.

Some of these actionable insights outlined in this paper discuss how corporate teams should focus on assessment principles by aligning their AI strategy with their overall organizational and departmental strategies while establishing a clear approach to managing and securing company data. Teams also should prioritize early AI initiatives by identifying two or three high-impact, high-feasibility pilot projects that address critical pain points for the team, such as contract analysis, regulatory monitoring, or tax provision automation. Then, they should define key performance indicators (KPIs) to track the success of such initiatives.

Critically, the paper urges organizations to establish strategic principles by investing in talent and training, while identifying any skills gaps among their professionals. As our research makes clear, effective AI deployment requires significant investment in both technology and corporate talent. Ongoing training and skill development are crucial for maximizing AI’s ROI 鈥� because tomorrow鈥檚 corporate professionals must be prepared to operate AI tools and critically assess outputs while building the judgment necessary for proper compliance.

“Those organizations adopting this holistic approach 鈥� combining strong AI strategies with comprehensive talent development and a relentless focus on strategic deployment and measurable outcomes 鈥� will not only survive but thrive,” says Laura A. Clayton McDonnell, President of the Corporates business segment at 成人VR视频. “They will redefine professional services, turning functions often seen as cost centers into strategic value drivers.”

Our research strongly underscores the importance of a well-defined AI strategy, comprehensive talent development, and a focus on strategic deployment and measurable outcomes. Organizations that embrace these principles will thrive by striving to turn corporate functions into strategic value drivers as they gain a competitive edge in an increasingly AI-driven future.

You can download

a full copy of the here

Jump to 鈫�

Managing Change in Indirect Tax & Compliance

For its recent report, , the 成人VR视频 Institute surveyed 206 indirect tax professionals in organizations in the United States, Canada, the United Kingdom, and Germany about the challenges they are facing, how they are addressing these challenges, the impact of new technologies (including AI), and how roles and responsibilities also are changing.

When evaluating the top measures of success, survey respondents cited accuracy of filings (with 89% of respondents citing this as a top measure), timely returns (83%), and minimizing the cost and resources required for compliance (65%) were most frequently mentioned measures. Notably, more than half of respondents (56%) cited automation of indirect tax processes as a key success measure, underscoring the growing importance of the drive to increase operational efficiency through technology.

This year鈥檚 survey also saw a shift in the top challenges facing indirect tax teams. Regulatory compliance has overtaken technology and automation, which was the leading concern last year. It鈥檚 not surprising. The regulatory environment is growing more complex and demanding, requiring adaptability on the part of indirect tax teams. While the adoption of technology remains critical, regulatory compliance is now the paramount focus, demanding both robust processes and agile, well-trained teams.

This places the industry in an interesting position as it prepares to deal with the sweeping changes that will result from the adoption of AI, potentially leading to another reshuffling of challenges and priorities in the near future.

Using technology to address challenges

The desire for greater use of technology is strong, the report shows. Increased use of technology and automation, including AI, was most frequently mentioned as the most desired future development. However, despite the appetite for greater automation and advanced technology, most organizations remain early in their adoption journey. Less than one in five indirect tax professionals surveyed (18%) said their organizations have fully deployed technology solutions. By contrast, more than half (61%) said their companies are either behind the curve or in the early stages of automating indirect tax functions.

Barriers to technology adoption are numerous, respondents noted. Budget constraints are the leading obstacle (cited by 63% of respondents whose organizations are not currently planning systems improvements), followed by resource limitations, lack of investment priority, legacy system incompatibility, and uncertainty around return on investment.

Interestingly, expectations for AI and GenAI adoption vary by geography. German respondents are the most optimistic about increased technology investment, while US indirect tax professionals are more cautious, possibly reflecting a higher baseline of existing AI adoption in the US market.

Shifting roles & training

As technology becomes more embedded in indirect tax processes, the function itself is undergoing a transformation, the report notes. Automation and AI are expected to relieve professionals of many repetitive, manual tasks, enabling a pivot toward higher-value activities such as strategic tax advisory functions, tax planning, and business insight generation. This evolution will result in more streamlined teams, with some roles consolidated, outsourced, or integrated into broader finance functions.

In-house tax function鈥檚 organizational structures also are changing as a result. Indirect tax is becoming more centralized and integrated into overall business operations, requiring greater cross-functional collaboration and alignment with corporate objectives. Indirect tax leaders are increasingly expected to partner with senior management, provide centralized reporting, and contribute to strategic decision-making.

As roles shift, job skill requirements will also change, and indirect tax leaders must decide whether to upskill their current talent or bring in new talent. More than half of respondents (58%) said they expect their organizations to invest in enhancing the knowledge and capabilities of their existing indirect tax professionals, far outpacing those who said their organizations plan to recruit new technology (28%) or tax expertise (23%).

Training within organizations is focused almost equally on technology and regulatory compliance, with a slight tilt in favor of regulatory knowledge, the survey shows. However, in the US, Canada, and the UK, fewer organizations are planning to provide technology training compared to last years鈥� report 鈥� a potential risk, given the increasing need companies face to move quickly on adopting fast-evolving AI technologies.

Given all these dynamics, the report describes how indirect tax functions would do well to focus on these areas:

Prioritize regulatory agility 鈥� Ensure that your teams have the tools, processes, and training to keep pace with regulatory changes across all jurisdictions in which your company operates.

Accelerate technology adoption 鈥� Evaluate your current stage of technology deployment and develop a clear roadmap for automation and AI integration, including training.

Invest in both technology & people 鈥� Prioritize upskilling existing staff, particularly in technology and regulatory domains, to maintain operational consistency and build resilient and adaptable teams.

Centralize & integrate 鈥� Move toward a more centralized indirect tax function that is closely aligned with the company鈥檚 overall business operations and strategy.

Foster cross-functional collaboration 鈥� Encourage partnerships between tax, finance, IT, and business units to ensure that indirect tax considerations are embedded in broader corporate decision-making.

As the report makes clear, corporations鈥� indirect tax function is at a crossroads. Regulatory complexity and technology disruption are reshaping the landscape, demanding new ways of working, new skills, and new organizational structures. Indirect tax professionals and leaders must embrace change, investing in both technology and talent and positioning the indirect tax function as a strategic partner within the business. Those functions that do so will unlock new efficiency gains, while positioning themselves to provide higher value and more strategic solutions for their organizations.

You can download

a full copy of the 成人VR视频 Institute’s recent report, here

Since 2015, the DoL reported a 283% increase in child labor violations; and perhaps more shocking, 28 US states have introduced bills to weaken child labor laws, with 12 of those states enacting those laws since 2021, according to the .

Indeed, the United States is the only country to not have ratified the United Nations Convention on the Rights of the Child according to , Director of Child Rights in Business, Global Consultancy Services at The Centre for Child Rights & Business (The Centre), an organization dedicated to helping companies address their impact on child rights in supply chains.

New root causes emerge

To understand the prevalence of and the underlying factors in the growth of child labor violations in the US, The Centre conducted two dozen risk assessments across 15 states for the operations of major brands in the US, and the findings are revealing.

by CORE, a human rights due diligence advisory firm, and The Centre, showed that while poverty and economic insecurity 鈥� two well-known factors in the presence of child labor 鈥� were found to be root causes in this growth of child labor violations, it was a lack of awareness that child labor is a growing risk that was at play as well, according to , VP, Communications at The Centre. Indeed, the US has a reputation of being the North Star in pursuing justice and what is right, but the facts regarding this spike in child labor violations in the US do not support this.

Since 2015, the DoL reported a 283% increase in child labor violations; and perhaps more shocking, 28 US states have introduced bills to weaken child labor laws.

The white paper also recently revealed several new drivers in the surge of child labor exploitation, including a large influx of unaccompanied minors from other countries who need to earn money to support themselves and send remittances to their home country, rollbacks of child labor laws in some states, and the debate over child labor laws involving how to balance parental rights to make decisions for their children against the government’s role in protecting vulnerable youth from exploitation. Regarding the latter, some argue for less regulation to support family economic needs and choices, while others emphasize the importance of safeguarding children’s rights to education, safety, and healthy development through appropriate oversight and standards.

In addition, gaps in actions by companies contribute to the problem. A lack of child labor policies and remediation procedures, including deficiencies in age-verification processes, exacerbate the issue. Moreover, the use of subcontractors, which masks child employment, and insufficient enforcement and auditing compared to overseas supply chains also have contributed to the rise in unlawful children鈥檚 employment. These shortcomings highlight the ongoing need for enhanced due diligence among companies, cross-sector collaboration, and continued child labor risk assessments.

Guidance for companies

To effectively act, a human rights-centered approach to addressing child labor requires companies to implement effective compliance with child labor laws, such as the Fair Labor Standards Act (FLSA), which already requires proactive measures, such as verifying worker age and preventing hazardous employment of minors. Companies also should actively work to identify, prevent, and remediate violations throughout their operations and supply chains.

To begin, companies should first develop a comprehensive understanding and awareness of the issue at all organizational levels, starting with leadership. This awareness is crucial because it sets the tone for the company’s commitment to eradicating child labor. Leaders should ensure that robust policies and procedures are in place, including age-verification processes and training for staff to recognize and report child labor.

Companies also need to adopt a proactive approach by conducting thorough risk assessments and audits, not just of their direct operations but also throughout their supply chains, including among subcontractors and lower-tier suppliers with where child labor is more likely to occur. Engaging with local communities and stakeholders, such as NGOs and child rights organizations, can provide valuable insights and support in identifying and mitigating risks.

A human rights-centered approach to addressing child labor requires companies to implement effective compliance with child labor laws [and implement] proactive measures, such as verifying worker age and preventing hazardous employment of minors.

Further, companies should implement effective remediation processes for those instances in which child labor is identified. This involves establishing clear protocols for removing children from harmful work situation and ensuring their transition to safe environments, such as schools or vocational training programs. Companies need to also provide economic support to the affected families to compensate for the lost income in order to prevent the children鈥檚 return to unlawful employment.

Additionally, companies fostering an environment in which workers feel safe to report violations without fear of retaliation 鈥� which can be achieved through well-publicized and accessible grievance mechanisms 鈥� can go a long a way to further effective remediation efforts.

By addressing child labor issues comprehensively, companies not only fulfill their ethical and legal obligations but also contribute to broader human rights protections and sustainable business practices, while reducing human rights risk exposure in their supply chains. “Companies should make a strategic decision to prevent child labor in their operations and value chains through due diligence,鈥� says , co-founder of CORE. 鈥淚t is not philanthropy.鈥�

Instead, it is the right thing to do and is a sound strategic business decision that鈥檚 based on ethics and maintaining the trust that customers, investors, and the public at large have placed in the company.

You can find out more about how companies are fighting against child exploitation here

Despite GenAI鈥檚 rapid advancement, however, chief financial officers (CFOs) think there is room to do even more. According to a of 100 CFOs, 70% say AI and GenAI are the most crucial technologies to support the finance function’s strategic decision-making. This portends significant investment in GenAI technologies throughout the tax, audit & accounting function, which means for corporate tax professionals, their daily work lives are starting to change dramatically.

鈥淲e need to understand that this is not only just groundbreaking technology, but this will also change the way we work and do business, lending itself to a culture shift in our industry,鈥� explains Gregory Homen, Tax Partner and Tax AI Transformation Program Lead at KPMG US. 鈥淚t鈥檚 leading to tax departments having to retrain and reschool its workforce for different attributes 鈥� and is redefining what a tax professional or CPA is expected to do and how they will be performing work in the future.鈥�

Inverting the pyramid

The tax world is currently in a state of flux, brought on by a host of international regulations and reform such as Pillar Two, the potential for significant US tax changes ushered in by the new Trump administration, and more. Even with this massive upheaval, Homen says GenAI still remains one of the number one topic his clients want to discuss.

In fact, he explains, this time of disruption and change may create more of an impetus for tax departments to adopt GenAI 鈥� and faster. 鈥淎ll of the uncertainty forces the need to accelerate the understanding of information. It was an aligning of the stars, if you will, when this technology entered the public domain with force in late 2022, becoming more mainstream.鈥�

We need to understand that this is not only just groundbreaking technology, but this will also change the way we work and do business, lending itself to a culture shift in our industry.

He compares tax professionals鈥� daily tasks to a pyramid, in which the majority of a tax professional鈥檚 daily work consists of repeatable, automatable tasks. This creates the base of the pyramid. The middle of the pyramid consists of data orchestration 鈥� entering, classifying, and ultimately cleaning tax data. And the remaining smaller portion of the work at the top is where the true value lies 鈥� applying tax professionals鈥� expertise to create and exercise value-added activities. Particularly in times of change, Homen explains, 鈥渋t’s hard to add value when you’re trying to wrap your arms around the current state 鈥� GenAI is allowing us to automate a lot of those more time-consuming tasks.鈥�

In fact, GenAI may flip this pyramid on its head, Homen adds. 鈥淭hat routine task can now be automated. Even with GenAI, tax departments will still require a human-in-the-loop review of the data and information. That said, the introduction of GenAI is affording us more time and energy to look at the value-add attributes 鈥� for example, how we can take a law, digest it, and understand more quickly how it impacts a company and its tax position and future strategies.鈥�

Indeed, when asked about the top ways they expect GenAI to impact the finance function, more than half of CFOs in the KPMG survey cited improved decision-making with predictive analytics (56%) and the ability to analyze large amounts of financial data in a short period of time (51%). A number also cited being able to automate tasks to reduce manual errors (37%) and streamline operations and processes (32%).

Deriving value from GenAI in tax

But even with those benefits coming to the fore, GenAI adoption is still far from universal. Homen explains that there are common fears around GenAI implementation that have to be overcome in order to derive real value from the technology. CFO respondents to the KPMG survey pointed to a number of potential barriers to GenAI adoption, including fears of data security breaches (69% of respondents), compliance and regulatory risks (52%), and accuracy and reliability of financial information (45%). And there is another major barrier that could prevent GenAI from implementation: data governance.

The output of a GenAI tool is only going to be as worthwhile as the data feeding the model and how well data systems can interface with one another. Even for advanced tax departments, Homen notes that next step is ensuring that enterprise data is not only organized but has the ability to be shared from one system to another, specifically noting the need for an interface with GenAI.

These small victories as not just efficiency gains but are driving value by allowing tax departments to stand out among other business functions through their proper and responsible use of company data.

This can be a large lift for many time-strapped departments, to be sure. But getting to this end goal can begin with small steps 鈥� even simply ensuring that data and documents are saved within proper systems rather than on an individual鈥檚 desktop. Homen describes these small victories as not just efficiency gains, but as driving value by allowing tax departments to stand out among other business functions through their proper and responsible use of company data.

鈥淟arge language models exist for everybody, right?鈥� he says. 鈥淭he competitive advantage lies in having access to the right one and infusing accurate data into these models.鈥� So ultimately, the models can offer insight into your data and ultimately allow you to make better and more informed data-driven decisions

Yet, many corporate tax departments are not yet at this point. GenAI鈥檚 implementation in the tax, audit & accounting world still has a lot of untapped potential, but if indications from CFOs in the KPMG survey are correct, the finance world at large and the tax industry by extension will be receiving a lot of GenAI interest and investment in the immediate future.

Then, it will be on tax professionals themselves to take that interest and turn it into true and lasting value.

You can learn more about the challenges tax professionals face with technology & innovation here

is a two-pillar solution to address tax challenges arising from the digitalization of the economy. Pillar One focuses on the allocation of taxing rights among jurisdictions, while Pillar Two aims to ensure that multinational enterprises (MNEs) pay a minimum level of tax on profits, regardless of where they operate.

consists of four interrelated rules: i) the Income Inclusion Rule (IIR); ii) the Undertaxed Payments Rule (UTPR); iii) the Subject to Tax Rule (STTR); and iv) the Global Anti-Base Erosion (GloBE) rules.

The central component of Pillar Two is the GloBE rules which provide a framework for the application of the IIR and the UTPR. Its function is to impose top-up tax on any MNE that is subject to an effective tax rate that is below a certain threshold, which is yet to be agreed upon by the members of the Inclusive Framework. The GloBE rules apply to MNEs that had annual consolidated revenue of more than 鈧�750 million in the previous fiscal year.

Detailing the regulations

The rolling out of Pillar One and Two, as expansive and complicated as they are, often left taxpayers scrambling to meet compliance deadlines without having the complete guidance from tax authorities. In order to provide more clarity and guidance on the GloBE rules, the OECD has issued several documents covering various aspects of the design and operation of the rules, such as the scope, calculation, administration, and enforcement of the top-up tax. The most recent documents, , include:

Transitional CbCR safe harbor guidance 鈥� This guidance outlined how MNE groups can use the Country-by-Country Reporting (CbCR) data as a safe harbor to determine their effective tax rates under the GloBE rules, at least until a common reporting template is developed. The guidance also clarifies how tax authorities can use the CbCR data to assess the compliance risk of MNEs and initiate audits or enquiries.

Qualified status Q&A document 鈥� This explains the peer review process that will be used to determine whether a jurisdiction has implemented the GloBE rules in a manner consistent with the OECD standards and guidance, and therefore qualifies for the status of a GloBE rule-implementing jurisdiction. The qualified status allows a jurisdiction to exempt its resident entities from the application of the UTPR by other jurisdictions, and to apply the IIR to the income of its resident entities that are part of an MNE group.

Administrative guidance 鈥� This included guidance in the following areas:

• • • Deferred tax liability recapture 鈥� This document provides extensive guidelines on how to determine if deferred tax liability accruals have reversed within five years, and how to account for such reversals in the calculation of the effective tax rate and the top-up tax under the GloBE rules.
    • Differences between GloBE and accounting values 鈥� This guidance addresses the situations in which there are differences between the values used for GloBE purposes and the values used for accounting purposes, such as different functional currencies, different consolidation methods, or different accounting standards. The guidance explains how to reconcile and adjust these differences to ensure consistency and accuracy in the application of the GloBE rules.
    • Allocation of cross-border current and deferred taxes 鈥� This guidance explains how to allocate the current and deferred taxes paid or accrued by an entity to its income from different sources and jurisdictions, taking into account the relevant tax rules and treaties. The guidance also provides examples and formulas to illustrate the allocation process.

The OECD will continue to provide additional guidance in the 鈥渘ear future鈥� on topics such as the treatment of losses, the definition of covered taxes, the coordination of the STTR with the UTPR, and the dispute resolution mechanisms. The OECD also intends to develop a common reporting template and a multilateral instrument to facilitate the implementation and administration of the GloBE rules.

Importantly, the implementation of the GloBE rules has had significant implications for the tax planning and compliance functions for corporate tax departments of many multi-national companies. These departments no doubt have increased their workload as they now have to monitor and report their effective tax rates across multiple jurisdictions and entities, while potentially adjusting their tax positions and structures to avoid or minimize the top-up tax.

It鈥檚 worth mentioning GloBE and Pillar Two rules are not a replacement of existing tax laws in various jurisdictions, but instead, they are an addition to them, creating complex situations and possible disputes among tax authorities. Corporate tax departments will have to be extremely efficient, potentially relying more on automation and technology to organize data, keep up with changing regulations in multiple jurisdictions, while still engaging in strategic work like tax planning and modeling.

You can find more about the issues facing Corporate Tax Departments here.

There are numerous factors that impact the economy 鈥� locally, nationally, and globally 鈥� and some leaders have to consider the impact tax policies have on . Indeed, the message around tax and the economy is also a strong message for politicians.

Factors impacting tax strategies

A by EY looked at three leading factors that businesses and their internal tax departments need to consider as they make their strategic plans for the remainder of the year. In the United States, real GDP increased 2.8% in the second quarter of 2024, up from 1.4% in the first quarter, and it seems this pace will continue into the second half of the year. Further, to be stable even though there has been a slight decline in job additions in recent months.

Economic growth

This economic growth and stabilization in employment have significant tax implications. Higher economic growth generally leads to increased corporate profits and personal incomes, which in turn boosts tax revenues. As businesses expand and hire more employees, the tax base broadens, leading to higher totals being paid in the form of corporate taxes and individual income taxes. Additionally, higher employment rates mean more people are contributing to payroll taxes, further enhancing tax revenues.

Inflation and interest rates

Inflation now appears to be gradually declining, with the Consumer Price Index showing a 3.0% increase from 12 months ago as of June. The Federal Open Market Committee is expected to lower interest rates by 50 basis points at some point this month. These changes in inflation and interest rates have profound effects on tax policy.

Lower inflation reduces the cost-of-living adjustments that are often built into tax brackets and deductions, potentially resulting in higher effective tax rates for many taxpayers. On the other hand, lower interest rates can reduce the cost of borrowing, encouraging investment and spending.

This can lead to changes in tax incentives and deductions as policymakers adjust to promote economic activities that align with the new interest rate environment. For instance, there could be increased incentives for capital investments or adjustments in mortgage interest deductions to reflect the lower borrowing costs.

Legislative developments

The political landscape of tax legislation is also evolving, with significant changes being considered for the Tax Cuts & Jobs Act (TCJA), which passed in 2017, and the Child Tax Credit (CTC), which is facing procedural challenges in the Senate. These legislative efforts could extend several business tax provisions in the TCJA and increase the refundable CTC amount.

Legislative changes can have direct and immediate impacts on tax liabilities for both businesses and individuals. For businesses, for example, extensions of tax provisions under the TCJA could mean continued benefits from lower corporate tax rates and other incentives that could potentially impacting their tax planning and financial strategies.

IRS developments

Included in the Inflation Reduction Act, passed in 2022, is significant funding for the U.S. Internal Revenue Service. These funds will be allocated to not only enforcement efforts but other IRS programs such as the Direct File program and updates on Employee Retention Credit (ERC) claims. And, not surprisingly, these developments will have an influence how taxes are filed and processed.

For example, aims to simplify the tax filing process, potentially reducing the burden on taxpayers and improving compliance rates. Its purpose is to encourage more accurate and timely tax filings, enhancing the efficiency of tax collection. Updates on ERC claims, on the other hand, highlight the IRS’s focus on scrutinizing tax credits and ensuring their proper utilization.

Navigating the dynamic tax environment

The interplay between economic growth, inflation, legislative changes, and IRS developments creates a dynamic and complex tax environment. Businesses and individuals need to stay informed and adapt their tax strategies to navigate these changes effectively. For businesses, this could mean revisiting their tax planning strategies in order to leverage new incentives and comply with updated regulations.

have lamented that one of the top worries that keeps them up at night is staying up to date with regulations. As the economic landscape continues to evolve, staying proactive and informed is crucial for businesses that want to manage their tax obligations and find new opportunities where available.

Today, tax department leaders will have to work differently in someways just to keep up, and more importantly, to be a strategic partner to their organization.

You can find more about the here.