As per EY report, 91% of Indian companies are planning to reduce their tax and finance budgets due to the ever mounting cost pressures. This goes on to reflect the impact of financial strain on corporate operations.
Cost Pressures and Evolving Challenges Driving Changes in Tax and Finance Operations in India
The survey conducted by the professional services firm reveals that, for the first time, cost pressures have become the primary concern for companies, as inflation and cost-cutting measures are diminishing tax and finance budgets.
At the same time, the survey highlights that tax functions face an increasing urgency to manage more complex and data-heavy tax responsibilities. New reporting requirements like BEPS 2.0’s Pillar Two rules, are expected to have a significant bearing on the burden of tax and finance functions, it added.
Signalling a strategic shift in ways of running the tax and finance operations, the companies are contemplating alternate operating models. The report added that, 59% of Indian companies are planning to change their tax and finance operating models.
With the ever evolving work dynamics, tax skills are increasingly being supported by data and technology expertise. Notably, there is lot of talent pressure at the same time.
As per the 72% of Indian companies, there can potentially be a huge challenge in the tax and finance functions over the period of next 5 years. This can be attribute to the dearth of new accounts entering the profession and the number of senior tax professionals retiring.
New challenges related to strategy, processes, data quality, and audit readiness shall be addressed by tax teams, since regulatory pressures keep increasing.
EY Survey: Tax and Finance Functions Must Embrace Innovation and GenAI to Address Growing Challenges
Jitesh Bansal, National Leader, Tax and Finance Operate, EY India said that “As regulatory and reporting burdens grow, tax and finance functions face increasing strain. Tax teams in companies will need to step out of their comfort zones and start addressing newer problems around tax function strategy, processes, data quality, audit readiness and so on. The need of the hour is for tax and finance functions to have access to expert tax knowledge, combined with a working knowledge of process, data and technology, whether inhouse or through external support”.
The EY Tax and Finance Operations Survey 2024 also reveals that 94% of Indian CFOs and tax leaders believe generative AI (GenAI) will improve tax functions, a significant jump from 2023. Many Indian tax leaders are already developing strategies or experimenting with GenAI.
