Ernst Young has released a study on some future trends it is seeing in the corporate tax and finance function around the world.

For the study, Reimagining the tax and finance function, EY polled senior executives from 1,722 large organizations in different countries. It found that 84 percent of the companies surveyed are taking action because of deficiencies in their current operating model. The survey found the tax and finance function generally is struggling to keep up with digital advances, and the global push towards more financial transparency and reforms of the international tax system.

“One of the most surprising findings in the survey is just how much agreement there appears to be on the three megatrends that are creating pressure on tax departments today,” said Joe Hogan, Americas tax and finance operate leader at EY. “I think the pace of global legislative change is one of the pressures creating a lot of tension in tax departments. Then technological disruption is another factor, and a perceived talent gap came out in the survey.”

Technology is disrupting and changing all elements of the tax reporting, compliance and controversy cycle, with 89 percent of the survey respondents agreeing that tax authorities are using technology to audit taxpayers to a much greater extent.

“The tax authorities themselves are using more and more technology to conduct audits,” said Hogan. “There are several countries in Latin America that are passing legislation to allow them to go directly into a company’s financial reporting systems to grab data in a particular fashion and then generate the tax returns themselves. That’s a new thing that companies have to consider how they’re going to deal with that. The other thing around technology is it gives tax departments the opportunity to create a great deal of efficiency if they invest in the right technologies.”

The pace of global legislative change is so fast, it’s overwhelming for organizations. Legislative changes include the passage last December of the Tax Cuts and Jobs Act in the U.S., and international tax changes as a result of the Organization of Economic Cooperation and Development’s Base Erosion and Profit Shifting initiative, also known as OECD BEPS. There have also been a number of investigations in recent years of sweetheart tax deals granted by some governments to multinational companies, such as Ireland’s tax deal with Google and Luxembourg’s deals with Apple, Caterpillar, Verizon and other U.S.-based multinationals. The study found that 87 percent of the senior executives surveyed said their organization doesn’t have adequate resources in place to identify, evaluate and respond to new tax legislation, like U.S. tax reform, BEPS and digital taxation.

“The responses were materially similar in the U.S. to what we saw in the global responses,” said Hogan. “If anything I would say the U.S. responses were slightly higher in terms of the amount of pressures that U.S. firms are experiencing. U.S. companies are feeling the effects of global legislative change. It’s not just the U.S. legislative change that we’ve just experienced. Things like the BEPS initiative in Europe, and also things like the state aid investigations that are going on in Europe. Several U.S. multinationals have been cited there. There are a number of different legislative changes and regulatory changes that are impacting U.S.-headquartered companies.”

U.S. companies in particular are calling on EY for help in navigating all the changes to the tax code in the recent tax overhaul. “EY is having a lot of conversations with clients right now on this exact topic,” said Hogan. “Companies are really talking with us about different ways that they can solve this. Right now, we must have in the neighborhood of 70 different conversations going on in this space that I’m aware of.”

Companies are also struggling to deal with various transparency initiatives around the world, such as country-by-country reporting of tax information, the Standard Audit File for Tax, and other electronic transactional government filings. Eighty-eight percent of the senior executives polled anticipate an increase in workload as a result of the different transparency initiatives.

The talent shortage is being felt acutely in tax departments, as in many other industries coping with low unemployment levels. The EY study found the skills needed in most tax departments are evolving quickly, with 98 percent of survey respondents agreeing that more technology and process skills are needed, while 89 percent of the respondents said the right talent is hard to find.

“In my conversations with VPs of tax, it’s very common for them to talk about the difficulty in finding the right talent, not just the numbers of talent, but also the talent with the right skills to meet shifting needs: talent that has some sophistication with technology in addition to tax skills,” said Hogan.

Meanwhile, the pressure to drive efficiency and reduce cost in this environment is significant, with 94 percent of the executives surveyed saying they have plans to reduce costs. Companies are evaluating the operating model in their tax functions and considering co-sourcing or outsourcing strategies to gain access to cutting-edge technology, bridge the talent gap and realize cost savings.

“Companies are aware of the ability to use technology to drive efficiency and they’re certainly already aware of tactics to use technology to a greater extent, and that’s what we’re focused on with clients,” said Hogan. “Based on my interaction with clients over the past year, there’s a real trend toward tax departments rethinking their future operating model in the context of all these new demands that the digital age is putting on them.”