Mid-market tax recap: tax reform and disruptive technologies
Mid-market tax recap: tax reform and disruptive technologies
Insight

Mid-market tax recap: tax reform and disruptive technologies

KPMG’s chief tax officer study dives into the biggest tax challenges for private and public companies.

 

Chief tax officers (CTO's) from public and private companies face off against different challenges in the mid-market and beyond. KPMG’s 2018 CTO study dives into the most pressing matters in the tax function and gives insight from top industry professionals to help you discover opportunities and avoid pitfalls. 

Economic optimism 

With the U.S. economy now enjoying the second-longest expansion cycle on record and developed economies seeing growth, it’s no wonder companies are optimistic about the economy.  Nearly three-fourths of public companies feel confident or very confident about the economic growth of the global economy and their companies. Private companies expect top-line growth to be moderate to good, but less than half expect growth of 5% or more.

Getting your tax priorities straight

Both private and public companies see compliance as a priority over the next 12 months with private companies viewing new technologies as an additional challenge. 

 

What are the top three strategic priorities for the tax function over the next 12 months?

 

  Private Public
Implementing new/emerging technology 55% 47%
Talent development/management 49% 39%
Compliance with legislative and regulatory change 47% 63%
Leveraging data to make decisions 43% 40%
Limiting reputational risk in an age of transparency 36% 38%

 

Tech and taxes (and blockchain)

Less than half of all CTO's believe they are keeping pace with technology, and private companies especially feel the pressure. From integrating multiple technologies effectively to exploring blockchain, private companies routinely view emerging technologies and their implementations as their top focus areas. 

Top challenges the tax function will face over the next 12 months regarding technology

 

  Private Public
Integrating multiple new technologies effectively 36% 28%
Optimal use of data analytics and predictive technologies 29% 27%
Integrating cognitive technologies 25% 16%
Reskilling the current workforce 25% 28%
Benchmarking ourselves against the technology use of our competitors 22% 15%
Exploring blockchain technologies 20% 12%
Trusting the quality of our data 19% 30%

The 2017 tax reforms

Two years later, these tax reforms are still top of mind for many CTO's. For public companies, the corporate rate reduction is expected to have the most impact, though the minimum tax on low-taxed foreign earnings also troubles public companies. Private companies look toward changes to specific industries and state and local taxes - though larger private companies tend to have similar concerns as public companies. Large private companies see their highest concerns as the corporate tax reduction and industry specific taxation. 

The flexible CTO

Most CTO's (98%) say their job has changed since they took it, but those changes have been to better for the business. Collaboration with other financial executives and the C-Suite showcases the tax function however, communicating tax risks and opportunities to the C-Suite poses more challenges to private companies challenges private companies more than public ones.  


Tax season comes around once a year, but implications are year round.

To add value for the organization, the tax function must embrace technology and collaboration – and KPMG can help. During this age of digital disruption, our team of 200 in our Washington National Tax practice can help you tackle the toughest tax issues challenging your mid-market business. Our team knows the digital tools needed to keep your tax function up to date and help integrate them to deliver value to your business.  

About the survey

KPMG’s 2018 CTO Study is based on a survey of 300 CTO's and top-level tax decision makers of companies with revenue of $500 million or more.