Although we have been sharing this important discovery with our tax executive search clients, we realize it is important to share this with more CFOs, Head of Taxes, and Human Resource professionals who are searching for the very best tax professionals for their organizations. We stumbled upon this salary issue during numerous private conversations with tax executive leaders over the past several months. My thesis and main proposition are organizations advertising open tax jobs online are losing access to the top levels of the tax talent pool due to salary transparency laws and A.I.
After speaking to hundreds in the tax profession, we often hear tax executive candidates telling us the Head of Tax jobs posted had stated salary ranges that are lower than what they are currently making. Therefore, these tax executives had no desire to inquire any further about the tax opportunities we presented to them due to the low salary ranges the companies posted to comply with state salary transparency laws. The top performers in tax have no interest in looking at a new opportunity when the salaries they see posted do not meet salary expectations. We decided to investigate this trend and discovered the new and emerging state salary transparency laws are having a negative impact on a company’s access to a hidden and extraordinary talent pool that is no longer available to them.
We also discovered A.I. gathering salary data from job sites is making the situation even worse because it is leading to salary compression of the lead tax executives we work with constantly. We conducted a compensation study on a corporate Head of Tax to test our theory. Over a 12-week period during October, November, and December 2024, we reached out to over three thousand tax executives and asked for a private discussion with them about their annual compensation. The report that follows in this blog series will discuss the results of our three-month salary study. First, we want to provide you some background information on our Corporate Head of Tax Compensation Report.
The acquisition and retention of a technically skilled Head of Tax is an important asset for every corporation. Companies who hire skilled tax leaders with sophisticated technical tax expertise must also trust these employees with highly sensitive and confidential corporate financial information. The goal of this report on Head of Tax compensation is to ensure organizations have accurate and up-to-date data and information on compensating their Head of Tax. This information is intended to assist a corporation to attract and retain a highly skilled, technically sophisticated lead tax executive. The Head of Tax role is responsible for reducing a company’s overall financial risk and saving income revenue that would otherwise be lost forever to global, international, federal and state and local tax authorities. The Corporate Head of Tax Compensation Report is provided to ensure you have the information necessary to attract and retain a Head of Tax in your multinational organization. Learning about our research will help a company understand what competitors are paying a Head of Tax with the goal of reducing attrition of valuable human assets and maximizing corporate tax savings and profits.
While conducting research for the 2024/2025 Head of Tax Compensation Report, we identified certain trends surrounding the compensation of lead tax executives in multinational corporations. While our survey outreach was sent to more than three thousand, five hundred, twenty-two Head of Tax executives, the focus of this specific report highlights the information we acquired speaking to lead tax executives currently employed by software companies in the 1B to 10B range. We are working on additional lead tax executive reports grouped in cohorts by revenue and industry.
The respondents for this report reside in California/Arizona/Washington State with all respondents being Head of Tax executives working at software companies in the western US region. Forty-two Head of Tax executives responded with data and information during a one-on-one interview with Kat Jennings, CEO, www.etsearch.com for this report. The individual interviews conducted were valuable in identifying issues currently affecting Head of Tax executives overseeing a multinational corporate tax organization in a software company. Tax executives spoke freely when given assurances of anonymity on the subject matter of compensation and current trends.
The Corporate Head of Tax Role
According to Tax Executives Institute, the leading corporate tax executive association, the Head of Tax administers the tax affairs of business entities and manages those entities. A corporate tax executive is responsible for promoting awareness of the multinationals business operations by focusing on both taxes and tax administration as a factor in global competitiveness.
Today, there is greater attention on the multinational corporate Head of Tax due to the increased demand for tax revenue worldwide including international, federal, state and local tax revenue authorities to make up for monetary shortfalls due to government overspending. Tax revenue authorities worldwide are more aggressive about increasing tax revenue to make up for government shortfalls.
According to the Tax Foundation, the OECD wants to implement Pillar 2 which would tax US multinationals a minimum of 15% tax on profits. This new tax increase is a game changer for US multinationals tax liability, if it happens. More than 140 countries have already agreed to the Pilar 2 framework to pay a minimum of 15% global tax. The US has yet to agree to follow Pilar 2 which will have a major impact on corporate revenue if implemented. This will put additional pressure on corporate tax leaders since it complicates income tax planning strategies even more.
The role of the Head of Tax is highly valued today for their ability to protect the company against aggressive tax revenue authorities worldwide determined to gain more revenue from corporate profits and income. The Head of Tax is responsible for operating in a demanding business environment that often transcends multiple countries, and time zones and has them working frequently outside normal business hours/days. The responsibilities of the Head of Tax are unlike any other on the corporate management team.
Head of Tax Alternate Titles
The Head of Tax of a multinational corporation carries various alternate titles including: Chief Tax Officer, Senior Vice President Tax, VP Tax, Director, Global Tax, Head of Tax & Treasury, Senior Director of Tax & Treasury, Tax Director, Executive Tax Director, Worldwide Head of Tax, Head of Global Tax, Managing Director of Tax, VP Global Tax, Managing Director, Global Tax, Director of Taxation, VP Corporate Tax, AVP, Chief Tax Counsel, VP, Global Taxation, Director, Tax Operations, VP Taxation, Global Tax Counsel, Tax Controller, General Director, Taxes, etc.
Head of Tax Job Description
The Head of Tax has overall responsibility for directing the tax function of the organization including:
Provide company leadership on tax strategy, M&A, tax compliance, tax accounting, tax planning, tax audits and tax controversy.
Direct and manage the tax team in compiling, preparing and filing tax returns, analyzing calculations of tax provisions, and the disclosure of all tax matters in company financial accounts to ensure compliance with all Federal, State, Local, Property, Sales & Use, and Foreign tax laws in all tax jurisdictions the company operates.
Ensure compliance with Federal, State, Local, Property, Sales & Use, and Foreign tax laws, rules and regulations. Ensures all taxes are completed on a timely and accurate basis.
Manage and direct the research and identification of tax savings opportunities including appeals to reduce tax assessments.
Monitor proposed and newly enacted tax legislation and communicate relevant information and provisions to management and business units.
Provide guidance to management and business units on all tax matters including legislative and regulatory developments.
Management of staff in Identifying, researching and resolving tax business matters, ensuring compliance with tax laws, rules and regulations in each jurisdiction the company operates.
Provide tax support to all business units, manage the research of tax issues and positions taken by the company.
Review work papers and research prepared by tax staff, build tax models and forecasts for emerging tax issues and analysis by management.
Collaborate with internal and external parties to gather information, analyze and complete projects accurately, proactively identify areas for process improvements and implement solutions to streamline processes. Work with internal teams to improve tax technology processes throughout the company.
Special ad hoc special projects as requested by the executive management team.
The Head of Tax Role Is Different Than An Accounting And Finance Role
The role of Head of Tax requires a different set of knowledge and skills than what is expected in an accounting and/or finance role. Many companies setting the salaries of their tax executives along the same pay grade of accounting and finance roles will experience higher attrition. The companies who pay their tax executives on the higher ranges will experience lower attrition. The demands of tax executives and their responsibilities were explained by the many tax executives we personally interviewed as they made the following statements in our discussions with them.
“The biggest difference between a Head of Tax role and Accounting or Finance role is that the tax job is judgement driven, whereas an accounting or finance role is consistently data driven.”
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“As the Head of Tax, it would take me 12 months to learn an Accounting or Finance job. However, it would take an Accounting/Finance Professional twelve years to gain the knowledge and skills they need to run a multinational tax organization.”
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“The Head of Tax today requires a very different skill set than a Head of Tax five years ago. The skillset is centered around knowledge of the business operations across multiple business jurisdiction,s and an understanding of technology and how it is implemented through a complex multinational organization. The job is demanding and highly stressful for anyone responsible for this role.”
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The responsibilities of a corporate Head of Tax are technically demanding, being awake for calls in multiple global time zones, requiring deep analysis of complex tax rules and regulations across multiple tax jurisdictions with different tax revenue regulations. Understanding the differences between Head of Tax responsibilities and Accounting or Finance responsibilities in a multinational corporate environment is important to not only acknowledge but to understand. The Head of Tax is responsible for research and analysis surrounding multiple country tax positions as they operate within different tax rules and regulations worldwide.
According to SHRM, the Society For Human Resource Management, the largest Human Resource Management association in the world, companies have a compensation philosophy and a formal statement documenting the company’s position about employee compensation. Compensation philosophies are typically developed by human resource departments in collaboration with the executive management team. Their compensation philosophy is based on many factors including the company’s financial position, the size of the organization, the industry, business objectives, market salary information, the level of difficulty in finding qualified talent, and the unique circumstances of the business. The compensation philosophy should be reviewed periodically and updated based on current market factors affecting the business. For example, market conditions may make it difficult to find qualified talent in a particular specialization, and an employer may need to pay a premium to attract and retain this talent.
Corporate Human Resource professionals who group Head of Tax Executive compensation at the same pay range as accounting and finance are facing challenges attracting and retaining the most skilled and experienced tax executives in the profession who save millions annually for a multinational enterprise. However, the Head of Tax must be supported with a proper budget and staffing for the tax organization. Every company wants a Head of Tax with the technical skills and knowledge to turn the tax organization into a profit center. However, not every company steps up to support their tax organization with the resources they need to claw back taxes from government revenue authorities.
Companies who compensate their Head of Tax at the top of the market range are retaining their tax executives, and the companies who do not pay their Head of Tax according to emerging higher pay trends are losing their highly skilled tax executives to competitors. Turnover at the Head of Tax level often results in a great financial loss in a company due to lost tax savings opportunities. What is privately being lost here is that companies never post the very top of the salary ranges they are willing to pay. In the more than one thousand retained tax executive searches we have conducted over three decades, more than eighty percent of the offerers extended and accepted were more than what the company quoted at the beginning of a search. Now think for a moment, if companies are posting salary ranges less than what is actually offered, and A.I. is now gathering all this salary data on job boards, and is driving the salaries lower; what you have is a larger number of highly qualified tax professionals un willing to come forward when they see these lower salary ranges than they are actually being compensated. This is a huge problem folks and most recently I spoke with a senior human resource executive sharing with me privately they are experiencing the same thing in HR roles. They are disinterested in the HR roles at the salary ranges being posted online.
It is important that companies acknowledge the responsibilities in Accounting and Finance are uniquely different than the responsibilities of the Head of Tax. Therefore, companies who make the decision to group and compensate their Head of Tax in the same pay range as accounting and finance executives are doing themselves a disservice. What we have often encountered during tax executive searches is the company has been underpaying their Head of Tax according to current salary trends. However leading companies willing to pay more to get top tax talent on board are attracting the top of the talent pool. These companies want the best the tax profession offers because they have learned these tax executives save them millions and even billions in revenue that could be taxed and lost forever. Lead tax executives have one of the most technically sophisticated jobs in a multinational organization today. We have seen a considerable rise in tax executive compensation over the past few years. However, state transparency laws will give the impression they are making less than what top performers are currently being compensated. Companies who fail to recognize this rise in tax executive compensation are losing extraordinary tax talent. There is an increase in demand by multinationals for technically sophisticated tax expertise. There are more open tax executive jobs now due to baby boomers retiring, and the smaller pool of technically sophisticated tax executives available for the increasing number of leading tax jobs companies seek to fill. In the case of software companies, the demand for tax expertise is rising and highly competitive. As a result, companies are offering more to attract and retain tax executives today.
The cost of losing a Head of Tax to a competitor has a great impact on a company’s bottom line. A company should do whatever it can to retain their lead tax executive. Many companies are now doing so by offering retention bonuses and an extra tranche of year-end restricted stock units as additional retention incentives. Companies certainly do not want to lose their Head of Tax to another company because the Head of Tax who knows the business is a valuable company asset. The CFOs who recognize the Head of Tax as an asset are always the CFOs who listen to and respect the valuable knowledge and savings their tax executives bring to an organization. A tax executive’s highly specialized tax knowledge can create millions(even billions) in tax savings for the company. Alert Human Resource Compensation committees are now paying attention by gathering more information on tax executive compensation pay. Even smarter are management teams doing their due diligence and discovering the importance of separating tax executive pay from accounting and finance pay grade levels. Accounting and finance jobs are not comparable responsibilities to tax and should not be treated as such. We know for a fact that tax is often compensated more than accounting and finance roles because we have worked closely with multinationals to structure salary offers of employment to a Head of Tax. Tax requires judgement driven responsibilities whereas accounting and finance are primarily data driven. The pay grades are not the same and companies often discover the truth when they go out to replace a tax executive.
Part 1 Of A Series On Tax Executive Compensation. Scroll down to bottom of this page to register to receive Tax Intelligence Report blogs on tax executive compensation: https://etsearch.com/
Follow our work to understand how underlying issues like state transparency laws and A.I. are negatively affecting a company’s ability to attract and retain the best of the tax profession.
Company executives are welcome to reach this author about a smart solution to attract the best of the tax profession: kitty@etsearch.com or text 858.232.4415 to request consult with Kitty Jennings.