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Tax Management Market Size By Component (Solutions, Service), By Organization Size, By Deployment Mode (On-premise, Cloud), By Tax (Indirect Tax, Direct Tax), By End-Use (Healthcare, Real estate, Manufacturing, Government & More), 2023 – 2032
- Report ID: GMI5450
- Published Date: Mar 2023
- Report Format: PDF
Industry Drivers
Tax Management Market size surpassed USD 20 billion in 2022 and is expected to grow at a CAGR of 10% between 2023 and 2032. Driven by the wide usage of cloud-based tax compliance solutions.
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The industry demand is primarily fueled by increasing government support. Government initiatives to fix public finances by broadening the revenue base are expanding the scope for product preference. For instance, the Income Tax Department of India launched Annual Information Summary in November 2021 that manages the tax data and Taxpayer Information Summary aids in filling returns.
| Report Coverage | Details |
|---|---|
| Base Year: | 2022 |
| Market Size in 2022: | USD 20 Billion |
| Forecast Period: | 2023 to 2032 |
| Forecast Period 2023 to 2032 CAGR: | 10% |
| 2032 Value Projection: | USD 50 Billion |
| Historical Data for: | 2018 to 2022 |
| No. of Pages: | 386 |
| Tables, Charts & Figures: | 386 |
| Segments covered: | Component, Organization Size, Deployment Mode, Tax, End-use and Region |
| Growth Drivers: | |
| Pitfalls & Challenges: |
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Furthermore, the mounting adoption of integrated solutions for tax compliance is poised to stimulate the tax management market growth. Emphasis on digitalization for tax audits and tax management among firms has encouraged companies to develop new integrated tax compliance software and services, fostering the market outlook. Recently, in February 2023, Vertex Inc., a tax compliance solution provider, unveiled its innovative Edge Cloud Solution, Vertex Indirect Tax O Series. This system supports retailers automate, configure, and deploy containerized tax engines.
Data security issues may restrain industry progression
Increased risk of data theft in cloud-based platforms is a major factor restraining the market demand. The growing use of cloud-based ERP systems is making these management solutions more vulnerable to security risks such as phishing and tax evasion. However, government efforts to maintain safe tax operations and guidelines are likely to help overcome this issue. In May 2022, Wolters Kluwer Inc. received authorization from the Federal Risk and Authorization Management Program for TeamMate & global audit expert solutions and TeamMate & FedRAMP cloud hosting scenario.
Increased incorporation of cloud platforms in ERP systems to push tax management solution segment growth
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The solution segment held over 60% tax management market share in 2022, owing to the increased integration of cloud platforms into end-user ERP systems by solution providers. To cite an instance, in April 2022, Intuit Inc., a business software company, along with Cin7, a cloud-based IMS giant, announced plans to launch a new strategic product bundle with Intuit’s Quickbooks, TurboTax, Mint, Credit Karma, Mailchimp software. The partnership is aimed at helping businesses with cloud switches and digitalization.
Incorporation of automated services to accelerate the cloud deployment model segment development
The tax management market size from the cloud deployment model segment is anticipated to reach USD 30 billion by 2032, propelled by the quick transition towards digitization across all industries and integrated cloud solutions by tax management providers to comply with governments’ tax transparency model. In October 2022, Sage Intact, an accounting technology firm, announced the integration of Microsoft Teams with its cloud services and capabilities to simplify and automate workflows for SMEs.
Favorable revised tax slabs to define the BFSI segment outlook
| Segment | Market Share, 2022 (%) |
|---|---|
| BFSI | 24.1% |
| Healthcare | 10.3% |
| Retail & consumer goods | 15.2% |
| Manufacturing | 14.2% |
| Government | 11.9% |
| Energy and utility | 7.5% |
| Real estate | 4.5% |
| Others | 12.3% |
| Total | 100% |
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With respect to application, the tax management market size from the BFSI segment held over USD 5 billion in 2022. With the emergence of new tax slabs and evolving tax compliance, almost all corporate and personal taxes are withheld from an individual's salary, which is anticipated to increase tax revenue, thereby bolstering the demand for tax management in the BFSI sector. Recently under the Indian Union Budget 2023-2024 published in February 2023, direct taxes were reduced from middle-income groups while extending the Credit Guarantee Fund Trust for Micro and Small Enterprises scheme with more than USD 1 billion, providing additional revenue.
Cumulative spending on consumer products to drive indirect tax market revenue
The tax management market from the indirect tax segment accounted for 50% revenue share in 2022, attributed to the rising expenditure on retail and consumer products, fueling the GST across regions. According to the U.S. Bureau of Economic Analysis 2022 report, the United States consumer spending increased by 2% in inflation-adjusted personal consumption in 2022 despite the growing prices of products. Additionally, the market for indirect taxes is also driven by surging investments in manufacturing, smart cities, etc.
Collaborations between solution providers to help tax management SMEs
Based on organization size, the tax management market revenue from SMEs segment will cross USD 25 billion by 2032. Solution providers are placing a greater emphasis on offering integrated products and services by delivering financial management compliance and teaming up to support SMEs, which is benefitting the industry progression. In February 2022, IncSight, a cloud-based advisory firm, commissioned Xero Inc., to introduce efficiency-driving tools and streamline compliance & aid small businesses with accounting solutions in the U.S. states.
Robust deployment of cloud ERP systems to push North America market
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The North America tax management market will reach USD 20 billion by 2032, on account of rapid adoption of cloud-based ERP systems among large firms in the region. Also, as the United States generates most of the tax money, tax management firms are focusing on extending their business in the country. In January 2023, Thomson Reuters, a provider of business information services, completed the acquisition of SurePrep, LLC, a US-based tax automation software and services company. The acquisition is aimed to expand the product portfolio and customer reach in the U.S. market.
Integration of advanced technologies in tax management solutions to enhance the competitive outlook
Top companies engaging in the tax management market are Intuit Inc, Thomson Reuters, HRB Digital LLC, Wolters Kluwer N.V., Avalara Inc, Safesend, Shoeboxed inc, Exemptax, TaxCloud, Avantax, SAP SE, Taxback International, Xero Inc., Vertex Inc., Sailotech, Taxslayer, Sage Intact, Canopy tax, and DefMacro. They majorly focus on strategic acquisitions and partnerships to attain a strong edge in the industry. To cite an instance, in October 2022, Avalara inc., a cloud-based tax compliance solutions firm, acquired four connectors technology, hired a development team, and licensed other assets from software developing company, AppKnit Inc. to improve oracle ERP growth and make integration of cloud-based tax technology easier.
Impact of COVID-19 on the tax management market trends
The COVID-19 outbreak had severely hampered the tax management industry in line with its major influence on public finance. The GDP grade of many countries dropped as a result of structural challenges such as health crises and hurdles in the growth of small businesses & employment base. Public finance became a key aspect of fiscal revitalization and better tax compliance. Thereby, amendments in tax policies and effective reforms for taxpayers and compliance services have uplifted the business scenario.
As per the Organization for Economic Co-operation and Development, countries involved in G20 are undergoing tremendous economic recovery and have taken fundamental reassessment for their tax and spending policies, which is improving public finance and accelerating the market value.
This tax management market research report includes in-depth coverage of the industry with estimates & forecasts in terms of revenue in USD from 2018 to 2032 for the following segments:
Market, By Component
- Solution
- Service
Market, By Deployment Model
- On-premise
- Cloud
Market, By Tax
- Indirect tax
- Direct tax
Market, By Organization Size
- Large enterprise
- SMEs
Market, By Application
- BFSI
- Healthcare
- Real estate
- Retail & consumer goods
- Energy and utility
- Manufacturing
- Government
- Others
The above information has been provided for the following regions and countries:
- North America
- U.S.
- Canada
- Europe
- UK
- Germany
- France
- Italy
- Spain
- Russia
- Asia Pacific
- China
- India
- Japan
- South Korea
- ANZ
- Southeast Asia
- Latin America
- Brazil
- Mexico
- Argentina
- Middle East & Africa
- Saudi Arabia
- UAE
- South Africa