Insights into Tax Strategies Unknown to Many Businesses
The need for strategic tax leadership has grown significantly in recent years, with a 32% increase in funds dedicated to income tax compliance from 2017 to 2023. This trend underscores the importance of having a seasoned tax professional at the helm of a company's tax department.
The ideal candidate for the head of tax department role should possess a combination of credentials, technical skills, and soft powers. Credentials such as a CPA or LLM, along with a background from the Big 4 firms, are essential. Technical skills, including fluency in tax automation and data analytics, are crucial for navigating the complexities of modern taxation. Soft powers, such as executive presence, cross-functional agility, and the ability to speak the language of finance, legal, and operations, are equally important for a successful tenure.
Elevating the tax function to an executive level allows a company to integrate tax strategy directly into high-level business decisions. This strategic positioning enables the tax leader to influence strategic planning and major business transactions, manage and mitigate tax risks proactively, leverage technology and specialized tax expertise, ensure cross-functional collaboration, and support growth through optimized tax structures.
By giving the tax function an executive voice, organizations embed tax considerations into the heart of business leadership. This balance between growth ambitions and disciplined, forward-looking tax governance is essential for long-term sustainability and risk mitigation.
Delaying the hiring of a tax leader could directly impact margins, especially for businesses that fit profiles such as manufacturers, agribusinesses, real estate and infrastructure firms, private equity-backed companies, and global enterprises. These industries benefit disproportionately from strategic tax planning.
A high-performing head of tax department isn't just managing returns but also designing entity structures across geographies. Career advisors and legal experts agree that job titles can significantly impact internal authority and external perceptions. The shift toward tech-driven tax functions is rising as technology reshapes tax strategy.
In 2023, 70% of tax leaders prioritized efficiency, with many focused on process improvement and new software. According to the 2023 KPMG Global Tax Function Benchmarking Survey, 35% of organizations say their tax function's primary strategy is aligned with value creation. However, more than one-third of finance leaders in a 2023 survey admitted their tax function was still "compliance-only" or just slightly strategic.
CFOs are highly capable but rarely have the time or depth of tax-specific expertise to manage multi-jurisdictional planning, credits, and structuring. Shawn Cole, the president and co-founder of Cowen Partners, has 20+ years of experience building and growing successful businesses. He emphasizes that the best time to hire a head of tax is after the filing season but before strategic planning begins (Q2 and Q3).
Large multinationals are spending an average of $25.6 million annually on income tax compliance. Bringing on a strategic tax leader can transform tax from a back-office chore into a forward-looking advantage, helping organizations to optimize their tax structures, manage risks proactively, and support growth effectively.
Shawn Cole, the president and co-founder of Cowen Partners, advises that the best time to hire a head of tax is during the Q2 and Q3 periods, after the filing season but before strategic planning begins. In line with this, a high-performing head of tax department isn't just managing returns but also designing entity structures across geographies, leveraging technology to transform tax from a back-office chore into a strategic advantage. This strategic positioning allows the tax leader to influence investing, business, and technology decisions, ensuring cross-functional collaboration and supporting growth through optimized tax structures.
