What's Happening?
The 2026 Corporate Tax Department Technology Report from Thomson Reuters reveals a widening gap between tax functions that are advancing strategically and those that are lagging. The report indicates that 64% of tax departments are still operating in chaotic
or reactive modes, a situation referred to as the 'frustration gap.' This gap is widening as technology investments have enabled some departments to shift towards more strategic, proactive work, such as forecasting and risk assessment. However, about a third of respondents have not experienced this shift. The report also highlights that leadership in tax technology strategy has increased, with 88% of respondents now having a dedicated leader for tax technology, a significant increase from the previous year.
Why It's Important?
The findings of the report underscore the critical role of technology in transforming tax functions from reactive to strategic operations. This transformation is essential for departments to provide more value to their organizations through activities like scenario modeling and decision support. The report suggests that departments that fail to adapt may face increasing operational inefficiencies and miss out on strategic opportunities. The growing dissatisfaction with current technology stacks, as reported by 56% of respondents, indicates a pressing need for investment in more advanced solutions. This dissatisfaction is broad-based, affecting both large and small firms, and highlights the urgency for tax departments to modernize their technology infrastructure.
What's Next?
Tax departments are encouraged to develop a clear automation strategy and invest in technology training to bridge the gap. The report suggests that departments should prioritize low-cost, high-leverage moves to strengthen their business case for future investments. As AI becomes more central to tax workflows, departments need to prepare for its integration by adjusting budget cycles and training programs. The report emphasizes the importance of having a dedicated leader for tax technology strategy to ensure that departments can secure the necessary resources and make informed decisions about technology investments.
