Tax Planning Software - Rapidly evolving to keep the CFO's office compliant, agile and on the front foot

Like it or not Tax is the least glamourous part of a CFO’s office. But it is an extremely necessary function. Staying compliant on taxes is critical and the alternative can result in heavy fines and penalties. Similarly effective tax planning and management will help the CFO to not only save on tax expenses but in many cases explore and use tax advantageous structures like tax credits to improve financials of the company.

In our view tax planning is not simply about compliance but it is also a strategic function that if used correctly can overtime be financially and strategically accretive to the company. Case in point, establishing manufacturing or data centers or office facilities in tax friendly states or cities. Similarly, locating international HQ’s in tax efficient locations or taking advantages of R&D tax credits. These are a few examples of how the CFO’s office can diligently engage in tax planning and add value to the company.

That said, few if any CFO’s come from the Tax function. Hence the demand for seasoned, successful and astute tax leaders stays extremely strong. A strong CFO will always have a strong Tax leader on their team. But the tax leader is never working alone. They will either have a full-fledged team of tax professionals or have external tax advisors who help the CFO’s office in tax planning, compliance, adherence, proactive tax management and even payments. Similarly, companies may procure a tax management software or build out a modular tax management stack that helps them cover direct taxes as well as indirect taxes as applicable.

The tax software business is large and ever-growing. On one hand we have entrenched global players like Thomson Reuters, Wolters Kluwer, Fonoa and others who focus largely on the needs of large enterprise players.

On the other had we have several software vendors who focus on industry verticals such as ecommerce, digital services, manufacturing etc. Then there are those who specialize in specific geographies and those that specialize in very specific tax areas such as corporate taxes, exemption certificate validation, sales and used taxes, VAT and even R&D tax credits.

At the CFO Office we are excited by not just the continued growth of automation in the tax space but also the emergence of new players such as Anrok, Instead, Zamp, April and TaxJar (Now Stripe). We have no doubts that these players are agile and likely the most innovative when it comes to adapting Artificial Intelligence in tax software. How this evolves remains to be seen but similar to the last platform shift (On-prem to Cloud) which gave birth to a plethora of new finance software vendors, the new platform shift to AI will create many new players that focus on every vertical in the CFO’s office and in particular in the Tax Software space.