The market for tax compliance software is expected to grow at a CAGR of around 6.4% from 2020 to 2027 and expected to reach the market value of around US$ 1,451.2 Mn by 2027.
Tax compliance refers to the taxpayers’ decision to comply with tax laws and regulations by paying tax timely and accurately. Tax compliance burden represents additional costs incurred by a business when complying with tax and obligations, imposed by the tax revenue authority. Tax compliance software helps organizations with accurate local and federal tax calculations, automates tax form filing and reporting, process tax returns, track tax regulation compliance, and manage certificates. This software helps organizations to centralize their important tax-related documents in order to create a paper trail business that can be used during audits. Additionally, the benefits associated with this software include decreased manual efforts to calculate and file taxes, helps companies to keep track of differing sales tax regulations across jurisdictions among others.
The increasing volume of financial transaction data collected by the companies is driving market growth. The feature like technologically advanced platform to create and manage audit reports, tax returns, and payments is additionally supporting the market growth. The ongoing efforts made by the companies and Fintech firms in order to simplify tax compliance with automation are propelling the market. Additionally, the complex nature of the existing taxation system and digital payments is further creating demand in the market. The increasing spending on the research & development activities, particularly to develop cloud-based solutions that can enable organizations to configure tax rates, perform tax accounting, as well as to generate tax reports in a single platform is driving the market.
On the other hand, the concerns associated with data security due to digital transactions and ePayment is likely to limit the growth to an extent over the forecast period from 2020 to 2027.
North America accounted for the maximum revenue share in the market
In 2019, North America held the maximum share in the tax compliance software market and the region is also projected to maintain its dominance throughout the forecast timeframe. The continuous changes in regulations of the regional taxation system are supporting the increased adoption of tax software across the industry verticals. The complexities associated with the taxation system of the region are inclining vendors to invest in tax compliance software. The businesses based in the North American region are diving into the advanced technologies and channels in order to sustain in the market as well as to upgrade at an exponential rate. As a result, software vendors of the region are integrating with the third-party developers to develop API-based software particularly to smoothen the taxation system.
Asia Pacific is projected to exhibit fastest growth over the forecast period from 2020 to 2027
The region is exhibiting the fastest growth in industry verticals like manufacturing and BFSI which is supporting the regional market growth. The major economies of the region including Japan, China, and India are contributing to the faster growth of the region in near future. The continuous efforts made by the government to protect their taxation system as well as encouraging and spreading awareness among people for tax compliance is further supporting the regional market value. Additionally, the software is available for different operating systems including Linux, Windows, iOS, and Android to increase the user base. As the operational companies of every industry verticals from the developing economies of the region are investing in the advanced technology infrastructure, it is expected to create potential opportunity over the forecast period.
Key Market Players
The players profiled in the report include Drake Software, EGov Systems, Exactor, FedTax, H&R Block, Intuit Inc., SOVOS, Thomson Reuters, Vertex, Wolters Kluwer, and Xero.
Market By Product Type
Direct tax compliance software
Indirect tax compliance software
Market By Enterprise Size
Small and Medium Enterprises (SMEs)
Market By Type of Operating System
Market By Industry Vertical
Energy and Utilities
Information Technology (IT)
Media and Entertainment
Market By Geography
Middle East & Africa
The market for tax compliance software is expected to reach a market value of around US$ 1,451.2 Mn by 2027.
The tax compliance software market is expected to grow at a CAGR of around 6.4% from 2020 to 2027.
Direct tax compliance software and indirect tax compliance software are the segments by product type in the tax compliance software market.
The increasing volume of financial transaction data collected by the companies, features like technologically advanced platform to create and manage audit reports, tax returns, and payments, ongoing efforts made by the companies and Fintech firms in order to simplify tax compliance with automation, and complex nature of the existing taxation system and digital payments are some of the factors driving the market growth.
Drake Software, EGov Systems, Exactor, FedTax, H&R Block, Intuit Inc., SOVOS, Thomson Reuters, Vertex, Wolters Kluwer, and Xero are the prominent players in the market.
North America held the highest market share in the tax compliance software market
Asia Pacific is expected to be the fastest growing market over the forecast period