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Why transforming the tax function is the new frontier for oil and gas

Growing regulatory complexity is ratcheting up pressure on oil and gas tax teams. Here’s how leading companies are responding.

Mining for new value-generating opportunities in the oil and gas industry isn’t limited to looking underground. The next new gusher might be percolating in your tax data—provided your tax team has the required tools and know-how to tap into it.

In fact, many leading oil and gas companies today are leaning into the idea that real value can be generated by innovations from the tax team, especially against the backdrop of game-changing new tax rules (global minimum tax, anyone?) and the significant impact of ESG regulations. Both areas are unfolding rapidly, and often in hard-to-predict ways, promising at least a few new disruptive challenges for just about every industry, company, and business team today.

But the hot seat is especially toasty for tax and finance teams in the energy, power, and utilities industries, who face business-critical urgency from the C-suite to meet the demands of these still-evolving new rules and regulations while moving more quickly to mitigate their outsized impact on the energy sector.

The good news: These new regulatory sticks come with some carrots for oil and gas companies, including potential tax incentives, credits, and even direct reimbursements. But to mine these opportunities, the oil and gas tax teams will need to deploy transformational new approaches that meet the changes head-on, as we detail in “Tax in a digital world,” part of the latest edition of our Drilling Down magazine.

Tax professionals are being asked to cover more ground — they need to understand the nuances of ESG reporting, the impact of digital taxes and the complexities of retail taxes, for example. … Yet few are seeing a commensurate increase in budgets or headcounts to handle the expanded scope.

Excerpt from Tax in a digital world and KPMG Drilling Down magazine.

Necessity is the mother of transformation

It’s no secret that reimagining the tax function is a critical goal across many organizations, and especially in the oil and gas industry. Indeed, 9 in 10 tax leaders in the energy, power, and utilities sectors said they plan to increase investment in tax-specific technologies, according to a recent KPMG tax benchmarking survey. And more funding to invest in tax technologies was tops on their wish list, with adding more people to make that happen a close second.

Here are the top five priorities for increased investment among tax leaders:


Tax technology


Additional personnel


Process optimization


Training and education



This people-process-technology challenge remains especially acute for tax teams. Nearly half of the chief technology officers in our 2023 CTO Outlook say they will invest technology or analytical training and skills development to reduce the burden on data management teams. In previous CTO surveys, technology leaders noted their tax teams had spent significantly more time collecting data than they do analyzing it and creating actionable recommendations.

Meanwhile, the tax team’s job gets more complex by the day. The C-suite needs rapid modeling for new lines of business as they look to diversify and potentially even invest in adjacencies like renewable energy companies. And the regulators and tax agencies are doing a lot of digging of their own, pulling transaction data in real time from company systems and even starting to make noise about direct access to the enterprise resource planner (ERP).

As a result, many oil and gas tax functions are now the company’s primary operational bottleneck. The business wants them to be more strategic, efficient, and capable. But the tax team needs more technology tools, skills, and bandwidth to deliver on those expectations. How to break the impasse? Digital transformation is the only way forward.

Toward a data-driven tax function

Digital transformation provides the tax team with a clear path to delivering increased value for the entire organization. Done right, it can empower the tax function to be both a high-level strategy partner and a highly efficient operating unit.

Existing processes can be reengineered with fewer manual touchpoints and greater agility. Increased automation, AI, and machine learning can create more self-service functions, freeing the team to focus more on analysis and value-generating tasks. And digital transformation will liberate data from the obligatory tax-only silo, connecting data across the organization in “tax-sensitized” ways to create a single source of the truth that more nimbly supports business-critical initiatives like developing new operating models.

Our KPMG teams have worked closely with clients on digital transformation initiatives, and many of them specific to the tax function. In that work, we’ve identified essential steps to developing a truly data-driven tax function, which include:


Standardize the data model

Sustainable transformation can’t happen until the tax function develops standardized, integrated processes and common data models. This means organizing data from multiple sources and formats into a standard structure that can be shared seamlessly between different systems, applications, and resources. Enhanced technology tools will play a key role in making this happen.


Embrace intelligent automation

Most oil and gas tax teams are being asked to do more with less. Allocating precious investment dollars to automation technologies can generate rapid returns on multiple fronts, absorbing a wide range of time-draining manual tasks and allowing the staff to deliver on the more-with-less mantra. Intelligent automation capabilities include data collection, speech and language tools, enhanced compliance and audit functions, and more.


Consider managed services

Moving some aspects of data management and transformation to a service partner can be a jump-start opportunity, since it can help the tax teams move faster even as their jobs get more complex. It gives teams the discretion to unbundle different parts of processes, keeping the most value-generating analysis activities in-house.

Mining the gaps

Amid increasing business complexity and regulatory activity, the tax function will likely only continue to move up the agenda for oil and gas companies. Company leaders are already looking to their tax teams to provide more strategic insights and identify new opportunities that deliver value.

Digital transformation can help tax teams meet those challenges and unlock new value. Start with a clear vision for your tax team—your goals, your pain points, your timeline, and fierce alignment among all teams. Transformation won’t happen overnight, so plan to build momentum with quick wins that demonstrate value. And you don’t have to go it alone: Collaboration with key internal company partners can accelerate progress, and support from external transformation pros can help the whole organization get there faster.

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Meet our team

Image of Angie Gildea
Angie Gildea
National Sector Leader – Energy, Natural Resources and Chemicals, KPMG in the US

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