Currently, business leaders face an increasingly complex tax environment: new legislation continues to be introduced, emerging technologies keep evolving, and macroeconomic uncertainty intensifies. These factors are reshaping how enterprises perceive their tax processes and tax positions, and are profoundly influencing the formulation of their future strategic decisions. Against this backdrop, the tax function is transitioning from a back-office support role to a core participant in strategic decision-making.

According to Monika Loving, managing leader of professional tax services at BDO (a public accounting, tax, and consulting firm), when enterprises evaluate business decisions that may involve tax implications, company executives and key stakeholders need to reach a consensus on the objectives, expected outcomes, and potential risks of such initiatives. In this process, the relationship between the Chief Financial Officer (CFO) and the tax department is playing a critical role.

In an interview, Loving stated that the CFO is "the driver of the relationship between tax and other business functions." Citing BDO's recent survey of 300 senior tax executives, she noted that in most organizations, the CFO "plays the role of chief collaborator" in fostering this critical consensus.

The survey showed that 92% of tax executives said the CFO invites them to participate in "important business strategy conversations," while 90% of respondents said the CFO helps "facilitate cross-functional collaboration between tax and other functions."

Tax function enters the core circle of strategic decision-making

Although the tax department typically falls under the CFO's office (which dictates that the two must maintain close ties), BDO noted in a press release announcing the survey results that "more tax executives than ever before have firmly established their place at the decision-making table." Referring to the relationship between the CFO and the head of the tax team, Loving said: "The level at which they participate in key business decisions on a daily basis has indeed risen."

She pointed out that 2020 was a key turning point for tax involvement in the organization's strategic direction—the tax department "helped enterprises enhance resilience and plan cash reserves" during the pandemic, and since then, this level of involvement has continued to rise.

The BDO survey found that as enterprises strive to cope with an uncertain macroeconomic environment (including ongoing changes in tariff policies and inflation, as well as tax law adjustments from the Trump administration's recent spending bill), more and more enterprises are relying on their tax departments to inform their future strategies.

The survey showed that 63% of respondents said they are "deeply involved" in discussions on enterprise resilience strategies, including topics such as revenue protection or responding to economic fluctuations; 60% said they are deeply involved in strategic transactions such as mergers and acquisitions or restructuring; and 58% are deeply involved in organizational risk management discussions.

Loving said that the tax department has "learned to be prepared at all times" in simulating potential tax law changes. The survey data was collected in May (before the spending and tax bill passed in July had materialized), showing that respondents had already anticipated upcoming tax legislation, even though specific details had not yet taken shape. But tax executives had taken measures "to position the tax department as an advisory role capable of advising the enterprise on scenarios that may arise from these changes."

A strong relationship between tax executives and the CFO is key to effectively responding to such legislative changes. Loving noted that it is the tax executive's responsibility to understand how these changes will impact the organization's tax position, and subsequently, "the tax department's role is to report the analysis results to the CFO, who then makes strategic business decisions based on that."

Making room for technology adoption

Positioning tax as a strategic leader helps enterprises plan future initiatives more effectively, such as integrating new technologies or tools. Today, more and more tax executives are investing time in evaluating the role of technology within their organizations. Business leaders are weighing the pros and cons of artificial intelligence—whether for their own operations or integrated into customer-facing products. Loving said, "This is often exactly the area where the tax department provides input and advice, from an opportunity or risk mitigation perspective."

Outdated technology remains a core concern for tax executives. The BDO survey found that 20% of tax professionals listed technological challenges or outdated tax technology as their top risk for the next 12 months.

The CFO, while ensuring the tax department gets the technology it needs, must also ensure clarity in data transfer between the two departments. Loving pointed out, "There are inherent risks in the data handoff from finance to tax," so it is essential to ensure "everyone uses the same language for data, and that data accuracy flows smoothly from financial systems to tax systems."

Loving said that emerging technologies like artificial intelligence can also help further strengthen the relationship between the tax department and the CFO.

The tax department can create value for enterprise operations in multiple ways, but to demonstrate value to the CFO (who is typically the one who ultimately approves these strategies), tax professionals "need to arm the CFO with data to prove the return on investment of that particular strategy." She noted that using AI "to integrate data more flexibly, quickly, and in a concise manner" is one way the tax department adds value through technology.