September 25, 2022

Are Some U.S. Companies Preparing to Trim Their Tax Department Fat?

When I first saw this KPMG press release, I figured it was the same old insufferable tripe. I mean, read this shit: 

Amid continuing economic and political uncertainty, senior management at US-based multinational companies are relying on their tax departments, now more than ever, to provide guidance and expertise on complicated regulatory and compliance issues, according to a new report from KPMG International.

Did you get that? Tax professionals are relied on by management more than ever. This is Osama is dead, stop the presses stuff, people.

But because I really don't have anything better to do, I kept reading and actually found something quite interesting:

While increased visibility within their companies has proven positive for tax departments over the past three years, other factors, including their operational efficiency, are being called into question, according to the report. Under pressure to cut costs, US companies are investing less in improving in-house tax departments than they did in 2009 and less than their global counterparts currently. Instead, US companies appear to be shifting tax department activities to shared services centers at a higher rate than global companies, (at a rate of 50% compared to 30% globally). Further, 25% of US respondents reported they expect their tax department to "change" in the near future. Of these, reducing costs was first among the primary reasons for the change, named in 80% of cases.

Okay, so we have a "shared services centers" thing, a "change in the near future" thing, and a "by 'change' we mean reduce costs" thing. Then if you look at the actual report you'll find a page entitled "Blueprint for Change" that outlines a number of steps for "change," of which, some are useful and others are not. And that's fine, KPMG does this sort of thing, but really when a company says they are going to "reduce costs" they are talking about letting people go. None of this synergizing bullshit; people — tax people — are expensive and it's very easy for a CFO to say to VP of Tax, "Here's your budget. Sorry, but you need to make it happen," and then said VP of Tax makes it happen and with any luck, (s)he won't be part of the "change."

But, I don't know, maybe there's some other magical way that tax departments can save money (tax people do like to waste paper, after all) that doesn't involve firing mass amounts of people although I can't imagine what it is. Plus, I don't trust surveys. And I certainly don't trust press releases.

[KPMG]

 

 

 

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