Analysis by Deployment (Cloud, and On-Premises); by Tax Type (Direct Tax, and Indirect Tax); by End User (Individuals, and Commercial Enterprises); by Component (Software, and Services); and by Industry Vertical (Banking, Financial Services & Insurance, Telecom & IT, Manufacturing, Retail, and Others) – Global Supply & Demand Analysis & Opportunity Outlook 2021-2031
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The global tax software market is estimated to garner a revenue of USD 42,583.7 million by the end of 2031 by growing at a CAGR of 10.9% over the forecast period, i.e., 2022-2031. Further, the market generated a revenue of USD 15,272.3 million in the year 2021. The growth of the market can be attributed to huge loss of revenue owing to tax invasion. In United States every year lose about USD 180 Billion in tax evasion. Further China and Japan lose approximately USD 60 Billion and close to 50 Billion respectively owing to the same reason. Hence installation of tax software is expected to reduce the tax fraud taking placing all around globe which is further boosting the demand for the same. Additionally, the governments have recognized the benefits of digitization and began implementing information technology and e-services to increase productivity and enhance government functions including tax collection and auditing. They are extensively employing tax software or integrated websites in order to offer dependable and quick operations, further assisting both clients and accountants in quickly accessing accounting information.
In addition, demand for cloud-based tax software is rising across all end user industries. The use of cloud accounting has changed how frequently accountants operate and interact with their clients. These cloud-based solutions support businesses in decentralizing data storage and computation and provide high levels of flexibility, scalability, cost savings, and data security. Further, there has been surge in small and medium scale businesses which is also estimated to boost the growth of the market. For instance, India has about 62 million micro businesses, 0.33 million small businesses, and roughly about 4000 medium-sized businesses. These small and medium-sized companies are also adoption cloud-based tax management solution extensively. This is since they benefit from the incorporation of cloud-based tax management solutions into their organisational frameworks, as it facilitates them in lessening the economic burden related to subscription, software programme license acquisition, and maintenance.
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Base Year |
2021 |
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Forecast Year |
2022-2031 |
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CAGR |
10.9% |
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Base Year Market Size (2021) |
USD 15,272.3 Million |
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Forecast Year Market Size (2031) |
USD 42,583.7 Million |
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Regional Scope |
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Growth Drivers
Growing Penetration of Smartphones-According to a projection, there are already about 7 billion smartphone users worldwide, which translates to an ownership rate of approximately 82%. Various applications are available on smartphones which prove to be beneficial in calculating tax. These ingenious tools make it easier to organize finances and make contingency plans. Also, not large number of people have access to computers and laptops. However, the penetration of smartphones is greater all around the globe. For instance, by the end of 2020, a projected 5 billion smartphones were expected to be in use worldwide, more than three times the number of PCs. Hence growing penetration of smartphones is estimated to boost the market growth.
Significant Penetration of Internet- There were estimated to be about 3 billion active internet users worldwide in 2022. That represents about 60% of the entire world's population. Most of the tax software completely reply on internet for its functionality. Internet access is essential to install program updates and utilize PPR software. High speed internet connection further improves the user experience. Hence rise in penetration of internet is expected to boost the market in future.
Growing Adoption of Digital Tools- A digital property tax tool was introduced in the United States in March 2022 by CentralSquare Technologies, a Florida-based public sector software supplier. The outdated systems are intended to be replaced by this cloud-based tax software. Property tax software is included in this product launch as local and state governments increasingly adopt digital tools.
Growth in Digital Financial Transactions - Globally, two-thirds of adults have made or received a digital payment, with developing economies accounting for an increasing share from 35% in 2014 to 57% in 2021.
Establishment of Various Taxation Strategies - In order to concentrate on data integration, processing, quality, warehousing, and management, the Income Tax Transaction Analysis Centre (INTRAC) was founded in India. For the purpose of assessing the risk associated with taxpayer profiles and carrying out audits, INTRAC would also use web-text mining and sophisticated data analytics, including artificial intelligence.Further, rising need and awareness for direct and indirect tax management is also expected to drive the market growth.
Challenges
The global tax software market is segmented and analyzed for demand and supply by deployment into cloud, and on-premises. Out of these segments, the cloud segment is anticipated to grow with the highest CAGR of 11.3% over the forecast period. This growth of the segment is attributed to the large number of finance professional working from home. For instance, since the UK Coronavirus lockdown began in March, the vast majority (about 96%) of accountants and other finance professionals have worked from home. Hence tax software makes it easy for employees to work from anywhere as so long as they are connected to the internet. Additionally, authorized users of cloud-based tax software have the freedom to access the system from any location around the clock using a web browser, so they are not restricted to the confines of their office space. Moreover, growing efforts of various organization in order to offer their best services to general public is also estimated to boost the market growth. For instance, the leading Indian income tax e-filing service EZTax.in has added new capabilities that automatically select the appropriate tax regime to help customers save every last cent of the IT return.
The global tax software market is also segmented and analyzed for demand and supply by end user into individuals, and commercial enterprises. Amongst these segments, the commercial enterprises segment is anticipated to grow at a highest CAGR of 11.0% over the forecast period, backed by growing use of tax management software by commercial enterprises in order to integrates numerous applications including sales and billing software, purchasing software, accounting and employee payroll system, and other financial applications. This software is deployable across corporate networks on a variety of platforms and could be tailored for certain business needs. Additionally, the technicality of sales and use tax has increased significantly. To detect tax fraud and tighten up compliance, tax jurisdictions all over the world are aggressively utilizing technology. As a result, it has become necessary for small business to extensively deploy sales tax software to make their business grow. Further, as businesses expand, companies require business-oriented tax management that is created in accordance with particular business requirements that encodes corporate policies, regulations, and processes. Hence, the demand for tax software is estimated to increase.
Our in-depth analysis of the global tax software market includes the following segments:
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By Deployment |
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By Tax Type |
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By End User |
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By Component |
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By Industry Vertical |
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The North America tax software market, amongst the market in all the other regions, is projected to hold the largest market revenue of USD 14,201.7 million by the end of 2031, up from a revenue of USD 5,268.9 million in the year 2021. The growth of the market in this region can be attributed growing penetration of smartphones, and surge in number of internet user. There were about 414 million internet users in North America. In 2026, this number is anticipated to reach approximately 445 million internet users. Owing to rise in the internet user the demand for tax software is expected to grow as using internet provide them to avail benefit of advanced technology. However, the market in Asia Pacific region is estimated to grow with a highest CAGR of 11.9% over the forecast period.
Our report has covered detailed company profiling comprising company overview, business strategies, key product offerings, financial performance, key performance indicators, risk analysis, recent developments, regional presence, and SWOT analysis among other notable indicators for competitive positioning. Some of the prominent industry leaders in the global tax software market that are included in our report are, SAP SE, Drake Software, Avalara, Inc., Wolters Kluwer N.V., Intuit Inc., ADP, Inc., Thomson Reuters, Vertex, Inc., Sovos Compliance, LLC, HRB Digital LLC, and others.
In 2023, market players might incur losses due to huge gap in currency translation followed by contracting revenues, shrinking profit margins & cost pressure on logistics and supply chain.
Controlling Inflation has become the first priority for global economies from last quarter of 2022 and to be followed in 2023. With skewed economic situations, rise in interest rate by governments to control spending and inflation, spiked oil and gas prices, high inflation, geo-political issues including U.S. & China trade war, Russia-Ukraine conflict to intensify the global economic issues.
The interest rates in the U.S. may be less sensitive in 2023 as compared to 2022; sigh of relief for businesses. Positive business sentiments, healthy business balance sheets, growth in construction spending (private construction value in 2022 stood at $1,429.2 billion, 11.7 percent (±1.0 percent) above the $1,279.5 billion spent in 2021, Residential construction in 2022 was $899.1 billion, up by 13.3 percent (±2.1 percent) from $793.7 billion in 2021, non-residential construction touched $530.1 billion, 9.1 percent (±1.0 percent) above the $485.8 billion in 2021.) showcases minimal impact of recession in the country.
Similarly, spiked spending in the European and major Asia economics including, India, China & Japan to showcase less impact on the global demand.
Ans: The major factors driving the growth of the market are growing penetration of smartphones, significant penetration of internet, growing adoption of digital tools, and others.
Ans: The market is anticipated to attain a CAGR of 10.9% over the forecast period, i.e., 2022-2031.
Ans: Rising theft of confidential data, rapid regulatory changes, and lack of skilled employees are some of the major factors estimated to hinder the growth of the market.
Ans: The market in North America is projected to hold the largest market share by the end of 2031 and provide more business opportunities in the future
Ans: The major players in the market are SAP SE, Drake Software, Avalara, Inc., Wolters Kluwer N.V., and more.
Ans: The company profiles are selected based on the revenues generated from the product segment, geographical presence of the company which determine the revenue generating capacity as well as the new products being launched into the market by the company
Ans: The market is segmented by deployment, tax type, end user, component, industry vertical, and by region.
Ans: The cloud segment is anticipated to garner the largest market size by the end of 2031 and display significant growth opportunities.
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