When moving some or all of their operations to the cloud, businesses are undertaking a larger venture than they may think. The cloud offers several opportunities for businesses to experience extreme cost savings and a high return on its investment, but also some tax implications that need deeper analysis before making the switch. That's why its so puzzling that many firms are failing to consult their tax professionals before migrating to the cloud. Recent research from KPMG found 52 percent of U.S. corporate tax professionals are not included on discussions when talking about cloud initiatives.

“Clearly, many senior tax professionals are not being kept up to speed on their company’s plans for the use of cloud technology,” said Steven Fortier, cloud enablement program tax leader at KPMG. “If the tax department isn’t involved early on, an organization can end up creating substantial risk and missing out on important tax planning or incentive opportunities.”

Why keep tax professionals in the conversation?
Many businesses don't migrate everything to the cloud all at once. Some firms will move their business planning software to the cloud, while others will house a budgeting planning tool in the cloud for better collaboration among their top executives. Tax professionals need to weary of every move in order to inform their chief financial officers of the potential tax implications and risks every step of the way. 

“Keeping the tax function in the loop on information technology decisions is particularly important since different parts of an organization may move into the cloud at various phases," said Fortier “Every time there’s a technology implementation, whether it’s cloud or not, tax risks and opportunities are likely to be created.”

According to the survey only 31 percent of the 206 senior tax professionals said they kept their CFO informed of potential tax issues their company could be facing in the cloud.

What are the biggest tax issues related to the cloud?
Tax implications in the cloud are difficult to calculate because many firms use the cloud in different ways and, in some instances, their cloud services are managed offshore. Every cloud deployment is different, meaning different tax implications. The survey found 46 percent of respondents said their company needs to focus on understanding the implications for U.S. and foreign tax-compliance purposes. Another 27 percent said their firm needed to get a better grip on compliance issues with the cloud in general.

“The fact that there currently appears to be limited connectivity and virtually no joint strategic planning between tax and other corporate functions highlights a critical gap – one that can create an opportunity for organizations that think differently and develop IT service delivery approaches that are much more tax efficient," said Rick Wright, global cloud enablement leader for KPMG.

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