Inside global tax functions: Private companies

International tax reform and surging M&A activity are the two biggest disruptors affecting the tax functions of private companies today. Advancing technology also poses challenges, particularly due to a lack of IT support for new or evolving requirements and changing finance/technology systems. Most private company tax functions still fall within the finance function, although a significant proportion are independent. Only 3 percent of private company heads of tax report to the CEO directly.

Most private company tax functions still fall within the finance function, although a significant proportion are independent. Only 3 percent of private company heads of tax report to the CEO directly. Survey results confirm a shift in tax functions’ priorities from reactive compliance to risk reduction. More private company respondents said their tax function’s primary strategy is most closely aligned with risk reduction than those who said their strategies are aligned with value creation or effective business partnering.

Private company tax leaders are starting to see the benefits of tax transformation projects, including shorter cycle times, reduced tax costs, fewer errors and better compliance. For success, however, it appears that effective change management is essential.

In the next 5 years, most companies expect to increase their number of fulltime employees (FTEs), as well as their use of co-source resources from shared service centers, global business services or centers of excellence.