Tax Leaders and the C-Suite: Speaking the Same Language

Welcome to the latest issue of Talking Tax, where each month I explore a major opportunity, trend, or topic in corporate taxation. This month, I’ll be looking at the reasons why CFOs and tax leaders are not always aligned, and how they can bridge that gap to drive value. Be sure to subscribe to Talking Tax for my latest views on tax strategy and tax policy. ?

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CFOs and tax leaders both bear responsibility for the profitable growth of a business, but they aren’t always aligned on the strategic value of the tax function. By learning to speak the same language, tax leaders can help CFOs deliver on goals that benefit the entire organization.?

BDO’s Tax Strategist Survey found that 78% of CFOs believe that the tax function offers strategic value to the broader business, and 75% believe the tax function is invited to weigh in on business decisions before they are made. Clearly, most CFOs see the benefit of actively engaging with the tax team.?

But when tax leaders responded to the same survey, a different narrative emerged. Just 27% of tax leaders indicated that they were sufficiently involved in a wide enough range of business decisions to meet the threshold of a “tax strategist” — the type of tax leader who consistently provides strategic input outside the core functions of the tax team.

When CFOs believe tax leaders are already adding sufficient strategic value, they may fail to actively include them in the wider decision-making process. This can have a flow-on effect where the full potential of a tax team isn’t deployed across the business, leading to missed tax opportunities or even increased tax risk or liability. Most tax leaders believe they can be more involved in these decision-making processes, so the disconnect between the C-suite and the tax team creates an interesting challenge: How can CFOs and tax leaders work together to enable a more strategic tax function??

Clear Communication Drives Strategic Value?

The CFO’s role is evolving, and tax leaders who understand this are well-placed to become valuable strategic advisors. Speaking the language of business and finance beyond tax means understanding the strategic priorities of the CFO and the business and how the tax team can have a positive impact on those goals. The language of tax can be highly technical, so tax leaders should make sure that the way they communicate translates effectively across the business, ensuring that tax planning strategies can be accurately deployed and that the C-suite is fully briefed on their strategic value.?

An organization can also better align goals and foster communication by expanding the range of metrics and key performance indicators (KPIs) used to measure the tax function’s impact. Essential benchmarks like effective tax rate or accuracy of tax returns remain a priority, but new benchmarks — such as goals related to tax transparency — can be designed to dovetail with the CFO’s ESG goals, helping to bring the tax function’s valuable insights to a wider audience.?

To become a trusted advisor to the CFO, tax leaders should hone the ability to calculate and communicate the tax implications of business decisions and policy shifts in terms that matter to the business more broadly. When leaders across the company see that the tax team can focus on bottom-line impacts while attending to technical tax details, the tax function’s full capabilities are on display, extending beyond compliance and into strategic value.?

Foster Alignment in Action?

When CFOs and tax leaders work together to set goals and improve accountability, their relationship can change from top-down or purely consultative to more symbiotic. Alignment drives better business outcomes, from enhancing decision-making to improving resilience, mitigating tax risk, and maintaining corporate reputation.?

By presenting a united front as strategic partners, well-aligned CFOs and tax leaders can unlock the full potential of the tax team and leverage highly technical knowledge to provide bottom-line value to the entire business.??

Want an inside look into CFOs’ top priorities for 2024? Download the 2024 CFO Outlook Survey .?

Want to learn more about how CFOs and tax leaders can align for a more strategic tax function? Read BDO’s latest insight here .