Indirect Tax Management Market Analysis By Type (Cloud Based, On-premises), By Application (Bank, Information Technology (IT) and Telecom, Manufacturing, Energy and Utilities, Healthcare and Life Sciences) and Regional Forecast to 2032

Updated On: 04 November 2024

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INDIRECT TAX MANAGEMENT MARKET REPORT OVERVIEW

The global Indirect Tax Management Market Size expanded rapidly in 2023 and the market is projected to grow substantially by 2032, exhibiting a prodigious CAGR during the forecast period.

The global indirect tax management market has been experiencing rapid evolution in recent years as many national government organisations and institutions are focusing on improving and updating their tax systems and taxation policies. Because these systems have now become quite complex, it becomes difficult for individuals to independently take care of their tax filing every year, and they therefore need advanced solutions to handle their indirect tax calculations and filing.

As each financial transaction done by individuals is increasing in rate due to the ease of making payments in the digital age, it proved to be very cumbersome when all these transactions need to be recorded.  more frequent and intricate due to digitization, the demand for efficient tax management solutions is growing. Due to this reason, the market is projected to witness a substantial amount of growth in the forecast period from 2023 to 2030, an upward spike which is being influenced by the high demand of accurate and timely tax management in various industries.

COVID-19 Impact: Market Restrained due to Change in Dynamics and Rapid Adjustments

The global COVID-19 pandemic has been unprecedented and staggering, with the market experiencing mixed demand across all regions compared to pre-pandemic levels. The sudden market growth reflected by the rise in CAGR is attributable to market’s growth and demand returning to pre-pandemic levels.

The pandemic significantly impacted the indirect tax management market growth. However, as businesses adapted to new norms and financial operations resumed, the demand for robust tax management solutions increased. The market is expected to recover and grow as companies continue to invest in advanced solutions to handle indirect tax complexities effectively.

LATEST TRENDS

"Integration of Advanced Technologies in Tax Management Solutions"

The main reasons behind the significant growth of indirect tax management market share of many major industry players is the introduction of advanced technologies in the digitally forward global scenario. Adoption of new digital tools such as artificial intelligence (AI) and machine learning (ML) has become a trending norm in the tax management solutions market, and more and more manufacturers are now going for this solution as it greatly increases the accuracy and efficiency of tasks such as tax calculations, tax compliance, filing and reporting. The reduction of human errors is improving overall tax management efficiency across all industries.

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INDIRECT TAX MANAGEMENT MARKET SEGMENTATION

By Type

• Cloud Based: Tax management solutions which are operated on the cloud have a variety of advantages such as cost-effectiveness, higher flexibility, usability across different systems and devices, and also accessibility of a large number of designated individuals in the organisation. The growing adoption of cloud technologies across various industries is driving the demand for cloud-based tax management solutions as well, so that new trends such as remote working and real time collaborative updates can be leveraged.
• On-premises: The tax management solutions which are installed and operated on-site using the company's own servers come under this category. Any businesses who are looking at aspects such as having greater control over their data and thereby taking care of security measures which can be closely monitored, prefer this type of system to ensure data protection.

By Application

• Bank: The banking sector is increasingly adopting indirect tax management solutions to handle complex tax calculations and compliance requirements, since there is a global shift towards digital transactions and regulatory requirements which call for the need of efficient tax management services.
• Information Technology (IT) and Telecom: To take care of various tax obligations and compliance across multiple avenues, the telecom and IT industries, which are growing rapidly in terms of expansion, manpower and infrastructure, need advanced tax management solutions to ensure uninterrupted operations.
• Manufacturing: Because of its vast manufacturing, supply chain, distribution processes and global transactions, the manufacturing sector faces complicated tax scenarios and needs a dedicated system of tools which can manage their indirect taxes while ensuring that compliance regulations are adhered to at all times.
• Energy and Utilities: Substantial tax laws and compliance standards are a regular dealing for energy and utility industries, therefore the market players associated with this segment want to ensure that their tax filing is taken care of by using advanced tax management solutions instead of dealing with such processes manually, which leaves room for human error.
• Healthcare and Life Sciences: The healthcare and life sciences sector also have an important requirement for specialised tax management solutions because of the complicated regulatory initiatives drawn up by national governments, which further drives forward the demand for effective tax management tools.

DRIVING FACTORS

"Increased Complexity of Taxation Policies require Tax Management Systems"

The complexity of indirect tax systems established by governments across the globe is something that every individual is not able to understand. Instead of hiring a chartered accountant to deal with the filing of indirect taxes every time, which becomes quite expensive, individuals as well as businesses prefer to opt for indirect tax management systems, which encourages market growth.

"Growing Digitization in Financial Transactions leading to Market Growth"

Since the advent of digitalisation for financial processes and transactions, there is a need for real-time tax return evaluation so that the individual or company adheres to tax compliance regulations. Therefore, the amount of investment being done by companies who deal in digital transactions and online operation of their businesses has increased, so that they are able to streamline their tax processes even further and enhance the overall operational efficiency.

RESTRAINING FACTORS

"Hindrance of Global Adoption due to Regulatory and Compliance Challenges"

It can prove to be highly difficult for businesses to navigate complex regulatory requirements of taxation laws since there are constant modifications that companies may not be aware about, and a lapse in the same might result in pricey repercussions. Therefore, to ensure compliance across multiple jurisdictions in the world market, businesses need to adopt expensive tax management tools so that they are able to maintain compliance and efficiently handle their tax liabilities. Unfortunately, this adoption is not possible for small time businesses who do not possess the budgeting capabilities to afford such tax management systems.

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INDIRECT TAX MANAGEMENT MARKET REGIONAL INSIGHTS

The indirect tax management market share is segmented into several key regions, including North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

"North America to Lead the Market because of their Advanced Financial Infrastructure"

North America is anticipated to dominate the indirect tax management market, driven by its advanced financial infrastructure and high adoption rates of tax management solutions. The region's mature market and strong regulatory framework support the growth of advanced tax management solutions, making it a key player in the global market.

KEY INDUSTRY PLAYERS

"Key Industry Players Shaping the Market through Technological Advancements"

Prominent industry participants have started utilising cutting-edge technologies such as artificial intelligence and machine learning to augment the precision of their indirect tax management systems, and therefore increase the efficiency of tax computations and adherence to taxation laws. Their strategic initiatives to develop such technologies through extensive research and development drive the market's competitive dynamics.

List of Market Players Profiled

• Avalara (U.S.)
• Wolters Kluwer NV (Netherlands)
• Thomson Reuters (U.S.)
• Intuit (U.S.)
• H&R Block (U.S.)
• SAP SE (Germany)
• Blucora (U.S.)
• Sovos Compliance (U.S.)

INDUSTRIAL DEVELOPMENT

March, 2024: One of the U.S based companies launched a new cloud-based tax management solution designed to integrate with popular ERP systems and enhance real-time tax calculations. This development aligns with the growing demand for flexible and scalable tax management solutions.

REPORT COVERAGE

This report provides a comprehensive analysis of the global Indirect Tax Management market, focusing on market size, segmentation by type and application, and regional insights. It includes detailed information on driving and restraining factors, recent trends, and key industry players. The analysis aims to offer a thorough understanding of market dynamics and assist stakeholders in formulating informed business strategies.

Additionally, the report covers technological advancements and recent product developments, offering insights into how these factors influence market growth and competitiveness. By examining various market segments and regional developments, the report aims to provide a holistic view of the Indirect Tax Management market landscape, helping businesses make strategic decisions and navigate the evolving market environment.