Technology isn’t the only thing companies need to consider when they move to the cloud. Enterprise tax consultancy and services provider KPMG published a survey that looks into a little-discussed element of the cloud – taxes. The consultancy explains that the cloud can impact a number of factors that may change taxation like the geographical location of physical infrastructure and the jurisdictions that apply to it and  the classification of cloud spending. There is also the issue of compliance. These things need to be taken seriously, but KPMG’s numbers show that taxes is not making it on the list of discussion points about the cloud.

Fifty two percent of the participants said they are “generally not included in discussions with top management or other groups in their organizations” to discuss the cloud. The biggest concern for most tax professionals is the impact of cloud computing on jurisdiction. Forty percent emphasized the need for a more comprehensive understanding of the cloud and taxable presence. Using a cloud service with servers in another country may be identical to moving a company offshore. The location of cloud servers could also change if companies have a physical presence in another state – that means charging sales taxes.

There are also other issues like the fact that federal R&D tax credits don’t apply to operations outside the U.S. Despite the large implications, the survey found, 47 percent of the tax pros that participated are not concerned about R&D credits in the cloud, and the remaining 43 percent are  “unsure about the implications.” The responses for the 206 corporate tax revealed several other areas of concerns. Key issues cited included:

• 44 percent – correctly identifying and calculating tax obligations and filing necessary returns
• 24 percent staying current on regulations across various jurisdictions
• 23 percent  installing appropriate tax-risk management procedures

This study is another example of how the rapid growth of cloud computing is fundamentally changing the nature of business. Organizations move beyond viewing the cloud exclusively from a technology perspective and begin to think strategically.