Corporate tax departments’ Groundhog Day problem — and the hybrid model that could fix it

2026-02-26 · Source: Thomson Reuters Institute · Field: Business & Management — Corporate Strategy & Leadership, Operations & Process Management, Consulting & Professional Services · Depth: Intermediate, short

Summary

Corporate tax departments are struggling with under-resourcing, leading to increased outsourcing costs, higher penalties, and reduced confidence in forecasting, according to the Thomson Reuters Institute's 2025 State of the Corporate Tax Department Report. A significant 58% of tax departments report being under-resourced, and 59% lack confidence in upgrading their tax technology within two years. This situation results in 50% of under-resourced departments incurring penalties, compared to 34% of well-resourced ones. The article proposes a "hybrid ecosystem" model, blending in-house expertise, targeted external support, and a coherent technology/AI stack, to shift focus from reactive compliance to proactive planning and strategic value creation. This model involves redesigning roles, segmenting processes, building a data spine with technology, and integrating AI for acceleration.

Key takeaway

For corporate tax executives facing persistent under-resourcing and compliance burdens, relying solely on increased effort or outsourcing is ineffective. You should strategically design a hybrid ecosystem that integrates internal expertise, enabling technology, and external partners. This approach allows your team to shift from reactive "firefighting" to proactive strategic planning, ultimately enhancing forecasting accuracy, reducing penalties, and securing a more influential role in business strategy.

Key insights

A hybrid ecosystem of people, platforms, and partners can transform under-resourced tax departments from reactive to strategic.

Principles

• Spending more does not solve structural problems.
• Segment work into "run" and "change" processes.
• Treat external providers as capability partners.

Method

Implement a hybrid ecosystem by redesigning roles, segmenting processes into "run" and "change," building a coherent technology data spine, and integrating AI for tasks like research and drafting.

In practice

• Invest in analyst and tax-tech roles.
• Automate high-volume, rule-based tasks.
• Experiment with GenAI for document summarization.

Topics

• Corporate Tax Management
• Hybrid Operating Models
• Tax Technology
• AI in Tax
• Resource Optimization

Best for: Executive, Consultant, Business Analyst

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Editorial summary, takeaway, and curation by AIssential. Original article published by Thomson Reuters Institute.