How to transform your corporate tax function into a strategic business asset

There is the long-standing view that corporate tax departments are cost centers to their companies — essential for compliance but offering little more to the business. However, this outdated perception is rapidly changing. The work of tax departments is increasing moving beyond compliance matters, even as compliance itself becomes more complex as jurisdictions and regulatory environments evolve — and that’s before adding in the current hot-button issues of global trade and tariff wars.

Indeed, today’s tax departments now need to be strategic, data-driven, and be able to provide critical information to the business. In essence, they need to become a modern tax department.

In the Thomson Reuters Institute’s most recent State of the Corporate Tax Department survey report, corporate tax department leaders said they recognized the need to do more work beyond compliance. Most of the survey respondents said they wished to shift their work balance to focus on doing more strategic and proactive work.

Modern tax teams are focused on this as well, already driving value by being able to influence key business decisions by providing strategic tax planning. This strategic planning includes advising on merger and acquisition activities and unlocking cash flow opportunities based on whether to expand into specific regions or shift jurisdictions. With current tariff concerns taking center stage, tax departments can support the business by providing critical and timely insights.

At the foundation of this move to a modern tax department is its ability to leverage automation for greater efficiency. Indeed, to truly shift from being seen as a cost center to a strategic business partner, corporate tax functions must evolve intentionally in how they operate, communicate, and contribute.

Shifting your tax department away from being seen as a cost center

Today’s modern tax department can be a value generator for their organization, as long as leaders keep three essential truths in their minds — and communicate them to management often. These truths include:

Tax strategy creates tangible business value — At its core, a tax department does far more than file returns. A proactive department can help shape its company’s financial strategy by reducing the effective tax rate, optimizing tax positions across jurisdictions, and uncovering opportunities for savings.

Tax expertise fuels business growth — From market expansions and mergers to new product launches, tax considerations can often determine whether a business initiative succeeds. Modern tax departments should make sure they are embedded early in strategic projects, ensuring optimal legal structures, tax incentives, and pricing models that enable their organizations’ sustainable and profitable growth.

Technology and automation drive tax department efficiency — Even with the best intentions of wanting to be a strategic business partner, tax departments must adopt advanced tax technology — such as automation tools, data analytics, and real-time reporting. These tools and solutions enable corporate tax teams to work faster, more accurately, and more strategically. With automation reducing manual tasks, tax professionals can then focus more on advising the business, not just ensuring compliance.

3 strategies to build a modern tax department

To become a true strategic partner, however, and shed the cost-center label for good, corporate tax leaders must focus on these three core priorities:

1. Align your department’s tax strategy with your organization’s business strategy

A modern tax team must understand broader business goals, such as market expansion, innovation, or restructuring, and then align their tax planning to support these objectives.

Steps toward this goal include:

• • • • embedding tax expertise into commercial decision-making;
      • participating early in strategic initiatives and transactions; and
      • advising on tax implications related to operations, contracts, and pricing structures.

Potential result: When tax professionals speak the language of business and contribute insights at the planning stage, they move from the back office to the boardroom.

2. Invest in tax technology and data analytics

Technology is no longer optional for tax departments — it’s essential. Investing in tax automation and analytic tools reduces compliance costs, minimizes risk, and enables real-time, strategic reporting.

Key investments to prioritize should include:

• • • • automation tools (such as indirect tax engines, e-filing, and e-invoicing solutions);
      • data analytics for forecasting, modeling, and risk management; and
      • integration with finance and enterprise resource planning (ERP) systems for seamless data consistency.

Potential result: Tech-enabled tax teams have a strategic edge, delivering critical insights that manual processes simply can’t match.

3. Build a forward-looking, business-savvy tax team

Tomorrow’s tax department is built on professionals who have a diverse skill set that includes tax technical expertise, digital fluency, strategic thinking, and strong communication skills.

Steps to be taken to future-proof your tax team include:

• • • • upskilling in areas like data analysis, automation, and business communication;
      • promoting collaboration with finance, legal, operations, and commercial teams; and
      • fostering a culture of agility, continuous learning, and adaptability.

Potential result: A modern, multi-disciplinary tax team secures a permanent seat at the table where key business decisions are made.

Today’s modern tax function goes far beyond compliance and reporting. It drives business value, mitigates risk, enables growth, and acts as a proactive strategic partner. When tax department leaders can successfully implement the three strategies above, it positions their departments in such a way that they are no longer a cost center but instead as a potential powerhouse internal partner that fuels the company’s growth and competitive advantage.