Advances in international market compliance tools, as well as the digitalisation of global tax administrations, are driving up in-house demand for technologists.
Sources from 3M, Microsoft, and Spotify tell ITR that hiring tax technologists has improved compliance, certainty, and reporting in their tax functions as companies ramp up their searches for them.
The digitalisation of tax administrations, which includes near real-time reporting and advanced analytics, is bolstering the case for hiring technologists by in-house teams.
Many organizations have been forced to upgrade their business intelligence systems to SAP's advanced S/4 HANA within the last three years to avoid the risk of SAP phasing out support for older versions by 2025, which has increased demand for data visualization and analytical skills on teams.
Senior vice president of tax at 3M in Minneapolis, Jed Larkin, claims that his team's technologists are faster than the IT department at integrating digital compliance tools with the company's latest intelligence systems.
"I would rather be in charge of my own destiny than put my faith in the hands of the IT department with a number of priorities ahead of mine," Larkin says.
Along with upgrading parts of the tax function using unstructured data and tight budgets, technologists are increasingly needed to standardize VAT reporting and deliver insights into audit risk. Companies that rely on legacy systems are at a disadvantage because many authorities demand faster responses to non-compliance, and penalties are severe.
Despite an increase in corporate demand for technologists, tax directors outside of the United States and Europe are having difficulty finding the right people to join their teams long-term without investing in training.
Because of the relatively new operating environment, Hany Elnaggar, senior international tax manager at Al Tayer Group in the UAE, says that Middle Eastern countries with the most up-to-date administrative systems are among the most difficult places to find experienced talent with technological prowess.
"The pace of change is remarkable here," Elnaggar says, "but there are big gaps in the market."
"Just the systems that authorities have in place to handle data are far more advanced than that needed to maintain a digital audit trail," he adds.
"I had to look for talent in Europe in a previous role because I could not find a senior enough person from Saudi Arabia to manage," Elnaggar explains. "But so far, I have not been able to find a person that encompasses all areas of tax with technology."
Some teams in the Middle East are relying on specialist recruiters and 'big four' advisory firms to find the right talent because technologists are hard to come by and the pace of digital administration is fast due to real-time reporting.
However, in Europe, where there is a larger talent pool, the picture is different. According to market reports from recruitment firm Harvey John, the majority of technologist jobs are available in Germany, the United Kingdom, and the Netherlands. So far in 2022, they show at least five corporate jobs advertised each month in Europe.
Indirect tax specialists have traditionally been better suited as technologists, according to Ed Moore, principal direct tax consultant at Harvey John, but those working in direct tax are also starting to acquire digital skillsets.
"Ready or not, the digitalisation of tax is becoming the new normal," Moore says, "and the potential of technology is dependent on the ability of the humans behind it."
He continues, "we said for months that demand for tax technologists in all forms will continue to grow."
Furthermore, data-management software solutions such as SharePoint, Alteryx, and others are altering the daily tasks that teams focus on and the skills that tax directors must look for when recruiting.
The 'big four' advisory firms, according to Carolin Symmons, global indirect tax director at Spotify, based in Sweden, are some of the best places to find technology experts, particularly when those advisers have worked closely with the group in question and understand the business structure. Before joining Spotify, Symmons worked at Deloitte in Sweden as a manager in the VAT practice until 2013.
"It is easier to work with a specialist when they know what the business entails and how it grows," Symmons says, "since so many of those details cannot be included in open market solutions."
Fast-growing digital businesses with the budget to hire technologists can more easily establish a fully digital tax function than traditional brick-and-mortar businesses because they are starting with a clean slate. Legacy systems in brick-and-mortar businesses necessitate more expensive customisable tools to work on top of the company's existing technology.
Despite widespread digitalization, many tax directors prefer to build custom solutions in-house because they are dissatisfied with the tools available on the market, including those offered by the "big four" firms.
These flaws are putting a strain on IT departments, which are dealing with a long list of issues from other departments that require custom fixes. Technologists, particularly those who work with 'big four' add-ons, are best suited to quickly develop fixes.
Before authorities introduce more detailed digital audits, many tax directors are attempting to structure their data and implement analytical tools in order to avoid future disputes.
According to one former principal corporate counsel at Microsoft in Seattle, her team built and used a SharePoint solution to tag work under audit in real time to better manage controversy issues like arm's length pricing on transactions, so compliance checks could focus on an individual's responsibilities rather than the company's reputation.
Large corporations are increasingly focusing on developing customisable solutions. Anglo American, Diageo, and other companies have budgeted specifically to hire technologists in the last three years, according to Michael Johnson, director of tax placement at finance leadership recruitment firm Brewer Morris in the UK.
"If you ask me, the next step is to have someone on the frontlines finding solutions as to even what new technologies to introduce, whether it's OneSource, Vertex or Oracle, before we even get to the stage of actual tax work within the business intelligence systems," Johnson says.
Third-party tools that do not meet market standards are on the rise, making it difficult to build on top of them. Given a fixed budget and a limited number of service providers, in-house technologists must go through an elimination process to determine the department's technology roadmap.
"You have this situation where the flow of individuals out of practice and into industry has never been in greater demand, but there has also never been fewer individuals to make that transition," Johnson adds.
In-house, technologists are in high demand because of their ability to unblock layers of system complexities in order to address legislative changes.
A fragmented international tax market has increased demand for technologists, but ongoing digitalisation efforts by tax administrations are standardizing processes, which may undermine technologists' role in the long run.
By fLEXI tEAM