Tax Software Market Trends

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 tax software 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 The outdated systems are intended to be replaced by this cloud-based tax software.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 tax software market growth.

Challenges

• Rising Concern for Incidence of Theft of Confidential Data - During the filing procedure of income tax returns, various documents are used that contain private information about the companies, including social security numbers, employer identification numbers, and other crucial details. Hackers take time-sensitive files from various tax filing platforms, steal secret data, and prevent the organization from submitting the files on time by freezing them. Hackers occasionally present the firm with incorrect tax return files in order to file a tax return. Owing to the replication of the social security number, the tax system does not permit the organization to resubmit the filing if it has already been submitted. Therefore, one of the reasons that is predicted to hinder the growth of the tax software market over the forecast period is the rising theft of sensitive information.
• Rapid Regulatory Changes
• Lack of Skilled Employees for Accounting and Handling Tax Software