Global Tax Management Market Size, Share & Industry Trends Analysis Report By Component, By Tax Type, By Deployment Type, By Organization Size, By End User, By Regional Outlook and Forecast, 2021 - 2027

Global Tax Management Market Size, Share & Industry Trends Analysis Report By Component, By Tax Type, By Deployment Type, By Organization Size, By End User, By Regional Outlook and Forecast, 2021 - 2027

  • February 2022 •
  • 295 pages •
  • Report ID: 6249539 •
  • Format: PDF
The Global Tax Management Market size is expected to reach $33.9 billion by 2027, rising at a market growth of 10.7% CAGR during the forecast period.

A tax is a governmental organization’s mandatory financial charge or other kinds of levy imposed on a taxpayer to acquire the fund for different public expenses. The taxation system is critical for a country’s economy since money is required to run the government and handle the activities of the state. The administration of money for the purpose of paying taxes is referred to as tax management. Tax management entails timely filing of returns, having accounts audited, and deducting tax at source, among other things. Tax management aids in the avoidance of interest, penalties, and prosecution.

Tax management software is a program or piece of software that assists taxpayers in managing taxes such as VAT, Employee Tax (PPh21), and Final Income Tax in order to comply with the existing tax legislation. The increasing number of financial transaction data gathered by enterprises is directly proportional to the demand for tax management software.

In addition, this has accelerated the development of a technologically advanced platform for creating and managing audit reports, tax returns, and payments. Companies and Fintech firms are highlighting the importance of automating tax compliance, resulting in a surge in demand for software. Moreover, the present taxation system’s complexity, as well as the growth of digital payments on a bigger scale, has created new avenues for major industry players to increase their offerings.

The demand for tax management solutions would be driven by the rise in demand for solutions that make it simple to monitor and manage taxes. Record keeping is a critical strategy for most organizations when it comes to storing necessary tax documents, and this process would become easier by adopting an effective tax system.

COVID-19 Impact

In 2020, the COVID-19 pandemic has had a negative influence on the tax management business, resulting in a sharp drop in year-over-year growth. Companies in the market, on the other hand, have used a variety of tactics to improve their operations. Collaborations and product development are helping them improve their current offerings. Companies like Avalara are offering advice and insights on how to deal with the issues posed by COVID-19, as well as expert ideas on how to boost company recovery in the post-pandemic era. Moreover, governments around the world had decided to extend the deadlines for tax filings in response to the uncertainty created by the COVID-19 pandemic. In addition, as the focus of governments was more on healthcare services, the demand for tax management systems remained low during the pandemic period.

Market Growth Factors:

High requirement for the automated system to effectively manage a massive transactional data

The continuing globalization and expansion of e-companies have created a perpetual demand for a platform that allows businesses to conduct business across nations, trading zones, and different interaction methods. Corporate tax and IT departments are striving to find additional partners and address unique client needs as a result of increased digitization. Tax Management solution enables businesses to better monitor and manage ever-changing transaction tax laws and regulations. Moreover, the Tax Management system can handle and manage compliance reports while also meeting tax filing deadlines with minimal manual labor.

The importance of a centralized taxation system for economic development is growing

A well-functioning taxation system can contribute to strong, long-term, and efficient economic growth. Taxation provides governments with the revenue they need to invest in infrastructure, reduce poverty, and offer high-quality, timely public services. It also ensures economic resiliency and long-term viability in order to promote growth. The tax system architecture is also linked to internal and global investment decisions in terms of transparency and equity.

With the help of a centralized taxation system, the state can identify if taxes are paid on time and correctly, and it can perform audits in a fair and efficient manner because the rules are already known and significantly simpler.

Market Restraining Factors:

Constant amendments in tax laws and the prevalence of poorly trained staff

The addition, alteration, or omission of a part of the law is referred to as an amendment in the law. The revision of tax rules is predicted to be a difficulty for solution providers, as they will need to hire tax specialists and deliver system updates to their existing users/subscribers, resulting in an increase in the solution’s cost and a decrease in the company’s revenue. In such cases, solution providers have to make some changes to their existing solutions. As a result, with each adjustment made by governments around the world, solution suppliers confront a number of obstacles.

In developing countries, a well-functioning tax administration is critical for mobilizing domestic resources, and the design of the tax system should be affected by tax administrations’ ability to administer it.

Component Outlook

Based on Component, the market is segmented into Software and Services. The Services segment obtained a significant revenue share of the tax management market in 2020. This is because the demand for tax management services would increase due to the rising adoption of tax management software. Once the software is installed in a system, it requires timely updates and other maintenance aspects wherein services play a critical role. The professional services area includes a variety of services such as tax software assistance, maintenance, and license renewal.

Tax Type Outlook

Based on Tax Type, the market is segmented into Indirect Tax and Direct Tax. The indirect tax segment garnered the maximum revenue share of the overall tax management market in 2020. This is because indirect taxes are paid more often as compared to the direct taxes, specialized solution is required for faster and more precise calculations. Indirect tax administration solution provides a standardized, unified platform for managing taxes and determining compliance duties. Vendors have begun to offer calculation-to-compliance indirect tax systems that include global indirect tax rates, reasoning, policy, and standards. Vendors are offering web-based compliance solutions for Value Added Tax (VAT), Goods and Services Tax (GST), and sales and use tax in several countries.

Deployment Type Outlook

Based on Deployment Type, the market is segmented into Cloud and On-premise. The on-premise segment collected a significant revenue share of the overall tax management market in 2020. Companies obtain various benefits by adopting on-premise solutions including a high level of data protection and safety. Moreover, private financial information can be compromised during the tax filing if the information is stored on some external or third-party server or system. Hence, many businesses prefer on-premise systems for safe and effective tax management.

Organization Size Outlook

Based on Organization Size, the market is segmented into Large Enterprises and Small & Medium-sized Enterprises (SMEs). In 2020, the large enterprises segment collected a significant revenue share of the overall tax management market. This is because of the rapid digital transformation among businesses and the widespread implementation of tax platforms. To manage taxes and regulate compliance requirements, an increasing number of major businesses are turning to tax management solutions. Hence, these aspects would accelerate the demand for effective tax management solutions among large enterprises.

End User Outlook

Based on End User, the market is segmented into BFSI, IT & Telecom, Retail, Healthcare, Energy & Utilities, Manufacturing, and Others. The retail segment acquired a significant revenue share of the overall tax management market in 2020. This is because tax management solutions assist retailers and brands to address challenges related to tax compliance. Sales tax rates are calculated by tax management systems depending on a range of factors, including federal, state, and local jurisdiction rules, product, geography, marketplace restrictions, and more. Moreover, these systems collect sales data from different channels and systems to alert the retailers when new sales tax demands are looming, so they may register their business ahead of time and stay compliant.

Regional Outlook

Based on Regions, the market is segmented into North America, Europe, Asia Pacific, and Latin America, Middle East & Africa. In 2020, North America emerged as the leading region in the overall tax management market by procuring the largest revenue share. In this region, the United States and Canada are likely to be the primary countries for this industry. By adopting tax management solution, companies witness many advantages, including a lower deductible amount, ease of tax calculation, time savings, automatic tax filing, and a reduction in the number of errors. In comparison to other countries throughout the world, developed economies in North America have seen a higher adoption rate of tax management systems.

The major strategies followed by the market participants are Acquisitions. Based on the Analysis presented in the Cardinal matrix; SAP SE is the major forerunner in the Tax Management Market. Companies such as H&R Block, Inc., ADP, Inc. and Intuit, Inc. are some of the key innovators in the Market.

The market research report covers the analysis of key stake holders of the market. Key companies profiled in the report include Avalara, Inc., Blucora, Inc., H&R Block, Inc., Sovos Compliance, LLC, Vertex, Inc., ADP, Inc., SAP SE, Intuit, Inc., Thomson Reuters Corporation, and Wolters Kluwer N.V.

Recent Strategies deployed in Tax Management Market

Partnerships, Collaborations and Agreements:

Jan-2022: Wolters Kluwer formed a partnership with Consilium, a company that designs, develops, and delivers effective cloud-based and on-premise software. Following the partnership, the company would provide its award-winning TeamMate global expert solutions in the French-speaking regions of Africa. This partnership would assist French-speaking internal audit experts in Africa to stay updated with auditing requirements while also taking advantage of digital transformation and cutting-edge internal audit solutions.

Nov-2021: Thomson Reuters formed a partnership with Deloitte Tax, an industry-leading audit, consulting, tax, and advisory services provider. The partnership would assist corporate tax and legal departments worldwide in their work. Moreover, the cooperation would provide solutions for in-house tax and legal departments to manage the expanding problems posed by worldwide compliance and regulatory requirements, as well as the pressing need to become more efficient, nimble, and digital.

Nov-2021: Avalara partnered with Barcart, the technology company transforming the alcohol industry through its online checkout solutions. The partnership would enable Barcart to continue to provide premium tax-compliant alcohol-checkout services to the company’s above 200 clients in the alcohol industry across DTC and three-tier models.

Jun-2021: Vertex formed a partnership with Alfa, a company that has been delivering systems and consultancy services to the global asset and automotive finance industry since 1990. Vertex introduced new integration of its Vertex Lease Tax O Series with Alfa Start. Through this launch, the company aimed to allow Alfa customers to make tax a smooth component of every transaction as more firms grow their leasing operations.

Apr-2021: Intuit ProConnect, from Intuit, formed a partnership with Practice Ignition, a web-based electronic health record company based in San Francisco, CA. The partnership would drive up the productivity of tax professionals. Practice Ignition, an automated proposal and payment management software that automates administrative activities, would integrate with Intuit professional tax solutions, giving tax professionals a better end-to-end workflow.

Mar-2021: Thomson Reuters formed a partnership with Armanino, one of the 25 largest independent accounting and business consulting firms in the nation. The partnership would address the go-to-market problems for small to medium-sized businesses (SMBs) by integrating the superior content and technology of Thomson Reuters with Armanino’s team of experts versed in sales and utilizing tax complexities encountered by clients doing business in various jurisdictions.

Feb-2020: Intuit formed a partnership with Karbon, work management software for accounting firms. Following the partnership, the companies launched Intuit Practice Management powered by Karbon to continue to speed up the software capabilities for tax professionals. Moreover, firms can now enhance their team’s output with Intuit Practice Management, a centralized, collaborative work management platform intimately linked with their email and the Intuit tax software they know and love.

Acquisitions and Mergers:

Dec-2021: Sovos took over TLI Consulting, a company that offers VAT determination software and associated consulting. This acquisition would have an optimistic impact on customers in Germany and across Europe. Moreover, the expertise and experience of TLI Consulting would strengthen the global tax engine strategy of Sovos, which aims to allow any customer system to be benefitted from indirect tax determination, CTC, and SAF-T support through a single integration.

Nov-2021: ADP took over Integrated Design, a software company delivering industry-specific HCM solutions. The acquisition would integrate the global reach and comprehensive HCM and Workforce Management solutions of ADP with the expertise of IDI. Moreover, the integration would provide customers access to an improved payroll and HR experience that would enable them to have higher growth and expand their business.

Nov-2021: Intuit took over Mailchimp, a world-class, global customer engagement and marketing platform for growing small and mid-market businesses. Following the acquisition, the two companies would work together to create a unique, end-to-end customer growth platform for small and mid-market businesses, enabling them to get their business online, market it, manage customer relationships, gain insights and analytics, get paid, access capital, optimize cash flow, pay employees, be organized, and stay compliant, all with the help of experts at their fingertips.

Oct-2021: Alvara took over CrowdReason Limited Liability Company, a formulator of SaaS-based property tax compliance applications. Through this acquisition, the company aimed to add property tax content and software in its worldwide compliance portfolio that extends the company’s foothold in a large and exciting new tax type. Moreover, the acquisition would raise the opportunity to help businesses with more of their compliance needs.

Sep-2021: Vertex completed the acquisition of LCR-Dixon Corporation, a specialized expert in SAP technologies and prominent vendor of tax intelligence solutions. Through this acquisition, the two companies aimed to streamline tax complexity. Moreover, the entities would integrate their offerings into a single platform provided solely by Vertex and serve as the prominent end-to-end solution vendor in tax for SAP customers.

Jul-2021: Sovos completed the acquisition of PetaPilot, which provides e-accounting solutions to tax authorities and businesses, and Saphety, which offers compliant e-invoicing services to governments and companies. Through the acquisition of PetaPilot, PetaPilot would become empowered to substantially expand the capabilities of its latest Advanced Periodic Reporting cloud platform.

May-2021: Wolters Kluwer signed an agreement to acquire Vanguard Software, a global provider of cloud-based integrated business planning (IBP) solutions. The acquisition would allow CCH Tagetik to expand its award-winning financial performance management platform into sales and operations planning, as well as supply chain planning and predictive analytics.

May-2021: Sovos took over the digital enablement division of Chile-based Acepta, one of the region’s prominent providers of e-invoicing, e-receipts, e-documents, and digital certificate solutions. The acquisition would help Sovos to strengthen its leadership in digital tax compliance and better place the company to fulfill adjacent compliance needs as governments advance the digitization of their economies.

Apr-2021: Avalara took over INPOSIA Solutions, a global acting business integration provider. With this acquisition, the company aimed to better manage the global compliance requirements of today and tomorrow for all types of businesses.

Apr-2021: Avalara took over operational assets of DAVO Technologies, a company that assists emerging small businesses automate the daily and ongoing requirements for sales tax. Following the acquisition, Avalara would simplify the day-to-day activities of the DAVO team, partners, and its customers so that they can focus on high-priority tasks.

Mar-2021: Sovos took over Fit Sistemas, a leading provider of cloud-based regulatory reporting and electronic invoicing solutions based in Brazil. Following the acquisition, Sovos expands its Systema Pblico de Escrituraço Digital (SPED) reporting capabilities and enhances its 360-degree view of the Brazilian tax environment, which is one of the most complicated in the world, with a comprehensive software-as-a-service (SaaS) solution for new-age tax challenges.

Jan-2021: Vertex took over Tellutax, a Portland-based edge computing technology startup. Through this acquisition, the company bolstered its technological and hybrid cloud vision, allowing it to serve customers in a highly hyper-connected environment. Tellutax edge technology would help Vertex to maintain its leadership in the enterprise sector while also enabling it to expand its ecosystem into next-generation payment and IoT platforms.

Dec-2020: Intuit took over Credit Karma, the consumer technology platform with above 110 million members in the U.S., Canada, and the U.K. Following the acquisition, the companies would work together to assist consumers to locate the proper financial products, put more money in their wallets, and provide financial expertise and advice, so they can achieve financial success with confidence.

Dec-2020: Wolters Kluwer took over eOriginal, a leading provider of cloud-based digital lending software. The acquisition would help GRC Compliance Solutions’ prominent position in U.S. mortgage and loan document generation and analytics into the rapidly growing digital loan closing and storage adjacency. Moreover, the acquisition would help the company to cover all workflows including loan approval, document preparation, and closing, with compliance certainty.

Dec-2020: Sovos took over LTtax, a New York-based provider of payroll withholding and unemployment tax software serving some of the largest retailers, financial institutions, and insurers operating in the United States. Following the acquisition, Sovos’ thorough withholding reconciliation capabilities would be integrated with LTax’s automation to provide a comprehensive, compelling solution for customers. Moreover, Sovos now has a single source for withholding administration for corporate tax teams, which is especially important for the numerous big life insurance and annuity firms it serves.

Oct-2020: Avalara took over Transaction Tax Resources, a financial services firm specializing in tax rates, tax matrices, rate lookups, and content exports services. Following this acquisition, the two companies would bring prominent tax technology with reliable tax content, expanding existing offerings of Avalara, adding the latest capabilities, and reaching new segments.

Sep-2020: Wolters Kluwer signed an agreement to acquire XCM Solutions, a cloud-based workflow solutions provider for professional tax and accounting firms. The acquisition would provide integration opportunities with CCH Axcess, its cloud-based software suite for professional firms in North America.

Product Launches and Product Expansions:

Dec-2021: Intuit Accountants introduced new improvements in its products and services including ProConnect Tax Online, ProSeries, and Lacerte for the upcoming tax year. Moreover, Intuit is continually enhancing its products and finding new methods to assist tax and accounting professionals in focusing on their clients’ needs and the long-term viability of their businesses.

Nov-2021: Thomson Reuters unveiled the Indirect Tax (IDT) Determination Anywhere platform at its annual SYNERGY Conference for corporate tax and accounting professionals. Determination Anywhere’s innovative cloud-based technology ensures that tax rates and jurisdictional requirements are up to date and correct, allowing businesses to maintain reliable tax compliance, provide a seamless customer experience, and generate income.

Aug-2021: Vertex introduced Vertex Cloud VAT Compliance solution. The new next-generation solution can assist firms overcome worldwide compliance difficulties as VAT legislation complicates an already complex economic and regulatory landscape. Moreover, the comprehensive VAT compliance solution includes integrated customized rule-based data quality and validation capabilities, as well as workflow automation, which improves data and returns accuracy while reducing liability risk.

Jun-2021: Sovos introduced the Sovos Advanced Periodic Reporting platform. The launch aimed to reduce workload burdens for companies struggling with continuing and diverse changes in VAT jurisdictions globally. The product’s intelligent validation, high-performance data processing and one of the best content gives immense value and better user experience. Moreover, the launch helps in controlling the complex global compliance challenges and Solve Tax for Good.

Jun-2021: Vertex rolled out its latest Vertex Tax Links integration for Mirakl, the enterprise SaaS platform that powers over 300 online marketplaces. With this solution, the company aimed to help clients and the sellers on their marketplaces to smoothly comply with the new regulation so they can provide an enhanced customer experience for shoppers and buyers.

Feb-2021: ADP introduced Roll by ADP, an innovative new payroll app. With the help of this app, busy entrepreneurs can finish payroll in less than a minute on their cellphone using an artificial intelligence-backed conversational interface by simply talking a basic instruction like "Run my payroll." The do-it-yourself app walks mobile users through the process, advising them on what to do and when to do it, and removing time-consuming tasks.

Feb-2021: Avalara introduced the availability of Avalara Vendor Exemption Management, a new product that assists businesses to eliminate the need to create, send, and track sales tax exemption documents during purchase. With an automated system to streamline how they issue, provide, and keep exemption certificates on tax-exempt transactions, Avalara Vendor Exemption Management helps businesses simplify compliance on purchases.

Scope of the Study

Market Segments covered in the Report:

By Component

• Software

• Services

By Tax Type

• Indirect Tax

• Direct Tax

By Deployment Mode

• Cloud

• On-premise

By Organization Size

• Large Enterprises

• Small & Medium-sized Enterprises (SMEs)

By End User

• BFSI

• IT & Telecom

• Retail

• Healthcare

• Energy & Utilities

• Manufacturing

• Others

By Geography

• North America

o US

o Canada

o Mexico

o Rest of North America

• Europe

o Germany

o UK

o France

o Russia

o Spain

o Italy

o Rest of Europe

• Asia Pacific

o China

o Japan

o India

o South Korea

o Singapore

o Malaysia

o Rest of Asia Pacific

• LAMEA

o Brazil

o Argentina

o UAE

o Saudi Arabia

o South Africa

o Nigeria

o Rest of LAMEA

Companies Profiled

• Avalara, Inc.

• Blucora, Inc.

• H&R Block, Inc.

• Sovos Compliance, LLC

• Vertex, Inc.

• ADP, Inc.

• SAP SE

• Intuit, Inc.

• Thomson Reuters Corporation

• Wolters Kluwer N.V.

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