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What CFOs need to know about tax managed services

An extended tax team can reduce both costs and risks

As businesses navigate rapid change and volatility, CFOs expect more from their tax department. But with tax already stretched thin, they need a more effective solution than simply asking teams to do more with less. The answer may be tax managed services, an operating model that manages risk and cuts costs by aligning the right people and technologies, at scale, to strategically manage the tax function.

Chris Yeaton

Partner, KPMG Tax Managed Services

The tax world is in a state of constant disruption and tax functions are under strain.

Key challenges include:

  • Constant regulatory changes
  • Rapid technological advancements
  • Shifting human capital requirements
  • Economic and political pressures
  • Growing ESG and transparency standards
  • Internal disruptions such as acquisitions, reorganizations, finance transformations, or ERP upgrades.

Faced with increasing risks and cost pressures, many CFOs are struggling to structure and staff a tax department that can operate both effectively and efficiently, prompting them to reevaluate their tax operations. According to KPMG research, 8 in 10 CFOs are strongly considering a managed services model to operate the tax function.1

12024 KPMG CFO Pulse Survey

Gain other valuable insights about the tax managed services opportunity

Tax function operating models evolve as demands escalate

You know scaling tax capabilities at the pace of change is a significant challenge for finance and tax leaders. We know that as pressure on tax departments amplifies, operational change is the only way forward. Our full thought leadership report illustrates why managed services is such a powerful sourcing strategy for overwhelmed tax teams and shares guidance for integrating this promising model in your own tax function.

Read more

Tax managed services keeps costs down and coverage up

Building an internal staff with the right mix of talent, skillset and experience to manage escalating demands on tax is a significant challenge for CFOs. They are often forced into solutions that drive up operating costs, such as inefficient resource utilization or temporarily filling expertise gaps with external suppliers. Moreover, they may struggle to access specialists across all the various tax disciplines who can keep up with the rapidly changing tax world, thereby increasing risk. Managed services can bridge this gap by offering the best of both worlds. It integrates the enterprise and industrial knowledge of your internal team with the technical and technology resources of the service provider in a way that keeps up with shifting regulations, disruptions, technology, and employee needs—all while keeping your extended tax team at the right size for your needs. 

Risk management

Managed service providers mitigate risk across all areas of tax through process standardization, advanced technology, and access to specialized expertise at the right scale and intervals, culminating in a tax function capable of adapting to evolving regulations, minimizing manual interventions, and reducing the likelihood of errors.

Cost reduction

Managed services provide a scalable team that flexes to your changing needs, reducing the cost inefficiencies associated with maintaining a fully resourced internal team. By delivering the right expertise and resources at the right time, the provider aligns with your current priorities and circumstances. This strategic alignment between staffing and organizations needs reduces costs while maintaining high-quality service.

How does a tax managed services relationship support your business needs?

The provider brings in efficiencies, resources, and their technology stack to alleviate operational pressures, allowing you to focus on key priorities and strategy. Your CTO continues to act as the tax head, now empowered with the extended capabilities and support of the service provider.

 

Key features include:

Trusted relationships that give you confidence in your risk coverage

Managed services agreements are generally long-term and fixed-fee. As such, the service provider becomes your team—often incorporating rebadged members of your own tax department. Unlike traditional outsourcing agreements, in which “I do this and you do that,” a managed services model effectively blends the interactions of the in-house and service provider teams in a way that allows data, execution, deliverables, and stakeholder discussions to be co-managed. This represents a cultural change from a traditional outsourcing model and makes trust the cornerstone for jointly developing a tax function specific to your needs.

Robust governance that preserves your strategic oversight

A successful managed services engagement requires a robust governance structure and ownership of the model on both sides. Organizations approach a managed services transition very thoughtfully, and having a clear view of the strategic drivers and corresponding solutions is essential. Key to this process are communication, trust, and collaboration, which ensure continuous strategic alignment. The service provider team becomes an extension of your team, but with enhanced resources and opportunities.

Customized responsibilities that flex with your changing priorities

The managed services provider will work with you to develop a framework that ensures both core functions and specialized tasks are carried out, with business continuity. The final structure should meet the strategic needs of the enterprise and can be flexed up or down depending on your current priorities, technological requirements, and specialized needs—all while making sure that your rebadged team members are well-supported and are provided with career opportunities that align with your personal goals.

Cost-effective access to the provider's leading edge technology investments

Technology is a key component of a successful tax managed services alliance. Leading service providers invest significantly in deploying new solutions and innovating efficient processes that can be scaled to meet your organization’s needs. Unlike the traditional approach where tax is viewed as the end-consumer of data, the integration of tax and technology within managed services allows for flexibility and data correction without requiring upstream adjustments. This synergy not only enhances tax operations, but can also optimize transformation initiatives across your entire organization.

Final thoughts

Moving operational tasks to a service provider like KPMG  not only lowers your costs and mitigates risks, but also frees your retained team to focus on value creation and strategic initiatives. This shift enhances your operation, fosters more effective collaboration, and leverages advanced technology to boost efficiency.

Gain other valuable insights about the tax managed services opportunity

Tax function operating models evolve as demands escalate

You know scaling tax capabilities at the pace of change is a significant challenge for finance and tax leaders. We know that as pressure on tax departments amplifies, operational change is the only way forward. Our full thought leadership report illustrates why managed services is such a powerful sourcing strategy for overwhelmed tax teams and shares guidance for integrating this promising model in your own tax function.

Read more

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Enabling tax professionals to not only meet demands, but to deliver added business value is a major challenge for leaders of today’s high-pressure tax department—and a key driver of the push towards tax managed services.

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Stay ahead in the unfolding future of tax

To navigate challenges and capitalize on opportunities in today’s high-pressure tax landscape, tax and finance leaders must reimagine the organization’s tax operating model. KPMG Tax Managed Services can help you evolve yours—supporting you with broad, scalable tax capabilities across your entire tax life cycle.
KPMG Tax Managed Services

Meet our team

Image of Christopher Yeaton
Christopher Yeaton
Partner, Tax Managed Services Practice Leader, KPMG US
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KPMG. Make the Difference.


Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. KPMG LLP does not provide legal services.

The information contained herein is not intended to be “written advice concerning one or more Federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

© 2025 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

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