What's Happening?
A recent study by Vertex Inc. highlights a significant gap in the integration of tax departments into digital transformation projects within companies. Despite the increasing importance of real-time reporting and AI-powered systems, many organizations
still treat tax as a backend function, leading to potential business risks. The research surveyed 1,050 senior IT, finance, and tax leaders, revealing that while 94% expect closer collaboration between these functions, only 12% have achieved full integration. The study emphasizes the need for tax to be a required stakeholder in technology planning to ensure alignment on requirements, data, and governance. The urgency of this integration is heightened by the adoption of AI, which can scale errors rapidly if not properly governed.
Why It's Important?
The findings underscore the critical need for companies to rethink their approach to digital transformation by fully integrating tax departments into the process. This integration is essential to mitigate risks related to compliance, cash flow, and reputation. As AI becomes more prevalent, the potential for errors in tax-related processes increases, making it imperative for tax, IT, and finance teams to collaborate effectively. The lack of integration not only poses operational challenges but also affects business agility and return on investment. By addressing these gaps, companies can enhance their adaptability and reduce compliance risks, which are crucial in an evolving regulatory landscape.
What's Next?
Organizations are likely to focus on developing operating models that facilitate collaboration between tax, IT, and finance departments. This may involve establishing shared decision-making frameworks and aligning teams around common data and process outcomes. As AI continues to be integrated into business operations, companies will need to ensure robust governance structures are in place to manage compliance and data quality. The shift towards more collaborative models could lead to more efficient and effective digital transformation efforts, ultimately benefiting the organization's overall performance and competitiveness.
