CFOs Have Spoken: 2023 Priorities for Tax Leaders

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This month’s edition explores tax-related findings from the 2023 BDO CFO Outlook Survey, including CFOs’ tax policy outlook and tax transformation priorities.

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CFOs’ Tax Priorities

BDO’s latest CFO survey can help give tax professionals better insight into CFOs’ plans for the year ahead, as well as how they can work together to address challenges and capture opportunities.

Overall, CFOs diverge on their top tax-related priority, as shown in the graphic below:

Understanding the business implications of tax policy changes and understanding the tax implications of strategic business decisions shared the top spot, with just over one in five CFOs choosing each of those priorities. However, our 2022 BDO Tax Outlook Survey found that just 45% of tax executives say they are “always” included in strategic planning, so many organizations still have opportunities to elevate the role of tax leaders in planning. Some industries have more room for improvement than others. For example, 30% of technology CFOs say the tax function does not currently provide strategic value to the broader business.

When tax and operational leaders work closely together, companies can make business decisions in a tax-effective manner. Elevating the role of tax leaders in planning can help improve efficiencies, avoid adverse tax impacts and build competitive advantage.

CFOs’ Outlook on Tax Policy

The Inflation Reduction Act (IRA), signed into law in August 2022, marks one of the most notable changes to U.S. tax policy in recent years. It allocates $369 billion to clean energy programs over the next 10 years — including many new or expanded renewable energy credits and incentives for businesses.

The IRA has significant implications for companies across industries. CFOs should evaluate all current and planned business activities to assess opportunities for claiming tax credits or buying or selling them through the direct transfer system. Leveraging the IRA to develop a tax credit strategy is an especially high priority for energy companies and manufacturers. For example, our survey shows that 90% of energy CFOs plan to use IRA credits and incentives to help optimize their total tax liability, so input from tax leaders will be pivotal for success.

As further guidance about the credits and incentives changes in the IRA is still pending, it will be critical to stay up to date on the latest developments this year.

CFOs May be Undervaluing Tax Transformation and Transparency

Enhancing tax risk management was the top priority for 18% of CFOs. Investing in technology such as automation, provision and compliance software, is a key part of achieving that objective. Tax transformation can deliver many benefits, such as improving accuracy and efficiencies and increasing tax transparency to better identify potential areas of tax risk. Yet, just 12% cited tax transformation as their top priority.

Automation can also free staff to focus on strategic work rather than repetitive manual tasks, which can help with recruitment and retention. Some industries, like healthcare and technology, were more likely to rank tax transformation as a higher priority, but all businesses can benefit from prioritizing tax transformation to help manage risk, increase transparency and enhance strategic decision making.

Tax transparency has also risen in importance as businesses increase focus on environmental, social and governance (ESG) issues. Investing in tax transformation to improve tax transparency can help companies meet their ESG strategy objectives. Just 19% of CFOs say increasing transparency in tax reporting is their top priority, although it’s a higher priority for some industries, such as energy and manufacturing companies.

Challenges to improving tax transparency include disparate data systems and strained internal resources. Our recent insight provides more detail on how to navigate these and other issues. Organizations also need experienced tax professionals who can extract actionable insights from complex datasets. However, adoption and enablement can be a stumbling block for tax transformation, so it’s important to devote sufficient resources to training as well.

Explore more findings from the 2023 BDO CFO Outlook Survey. ?

What do you think is the most notable takeaway for tax professionals in the survey results? Let me know in a comment below.