Tax leaders around the world are struggling to close tax gaps, address workforce challenges, and improve taxpayer service.
At the same time, they must adapt to constant changes. New laws, rising service expectations, and sophisticated tax avoidance schemes drive a constant stream of adjustments. Once policies change, operating procedures and supporting systems should adapt quickly. However, organizational inertia and complexity often make changes difficult.
There is an emerging concept of taxes in a globalized world. Tax today is a powerful indicator of how a business views its role in society and its commitment to its purpose. It’s a critical element of a business’s social contribution—part of the “S” in ESG reporting.
vGlobal tax structures are evolving. In 2015, the Organization for Economic Cooperation and Development (OECD) and G20 countries adopted a form of country-by-country reporting for large multinational corporations. The goal was to increase transparency in the international tax system. A bigger change is coming over the next several years.
These same entities are adopting a “Two Pillar Strategy” for multinational taxes. This new approach to global tax would re-allocate tax revenues to market jurisdictions where customers reside. It also would minimize tax arbitrage between governments. It will sharply increase data collection and drive more change through tax agencies.
Meanwhile, digital technologies are progressing at ever-increasing rates and are transforming all industries. Quantum computing to model pharmaceuticals, autonomous vehicles, and credit fraud detection across millions of data records are examples of technology changing our lives every day.
The work and daily business of tax agencies will also be transformed. Intelligent automation, artificial intelligence and hybrid-cloud underpin those changes. However, the concrete implementation is still in its infancy.
In this context tax agencies are asking themselves:
→ Who is the taxpayer and how should tax agencies engage with them?
→ Can technology help to build trust and transparency in taxation?
→ How can tax agencies realize efficiency gains and compliance security?
→ What is sustainable tax?
→ What are the implications of the OECD Two-Pillar-Strategy?
→ How can a tax agency measure maturity against this Modern Tax Administration vision?
→ How does a tax agency mature in this digital transformation?
As an approach to answering these questions, we are launching a series of blogs on the ‘Future of Tax’. Furthermore, we present a model for the assessment of digital maturity and the systematic development of digital capabilities. Taken together, this enables a well-founded assessment of Technology-readiness. This will allow a systematic and well-directed realization of potential.
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