“Uncertain” or “risky?”
It seems possible at least one of those terms will be considered for the “word of the year” announcements that various linguists and dictionary publishers release at the end of each year. In late 2018, for example, Oxford Dictionaries selected “toxic,” Dictionary.com chose “misinformation” and the Cambridge Dictionary went with “nomophobia” (ten points if you know what that means!).
Risk and uncertainty are certainly terms tax executives and their leadership teams should be aware of in 2019 as they navigate a highly fluid and unpredictable global tax landscape. The uncertainty stems from Brexit, moves to tax digital companies’ revenues, the increasing likelihood of real-time taxation requirements and the implications of new tariffs, as well as the unforeseeable and unintended consequences of these and yet to be enumerated new fiscal policies.
Here are three anticipated global tax issues my colleague, Vertex Chief Tax Officer Michael Bernard, and I identified—in our recent FEI Daily article – as important to monitor during the coming year:
- A global tax on the digital economy: While the UK plans to tax companies with over 500 million pounds of revenue from digital services, EU finance ministers, the OECD and other entities are looking into different options. If the OECD doesn’t act by 2020, the UK’s plan will go into effect. The bottom line is that in some form, countries will act unilaterally. Plus, the conversation about tariffs on US and Chinese goods—most recently focused on technology—is constantly changing. While outcomes are currently up in the air, it’s inevitable there will ultimately be an impact on tax given that tax and tariffs are intertwined. It is important to note that economists are still attempting to fully understand the economic complexity and over-all implications of the global digital economy and its intricate function, at least from this vantage point.
- Brexit may change the fiscal panorama: No matter what happens with Brexit during the next few months, there is always potential impact on the EU and beyond. As such, businesses should expect to face new regulatory regimes and legal implications to both tax and trade everywhere. Multinationals should begin evaluating Brexit’s potential impact on the entire fiscal panorama in the face of a continuing and contracting global economy.
- Real-time reporting requirements are increasing: Real-time reporting and taxation will likely continue expanding in 2019, placing greater demand on multinationals. European countries believe in the potential of real-time taxation to help close tax gaps and increase revenue by improving tax reporting accuracy and visibility into business transactions.
To comply with real-time reporting requirements, companies must be able to calculate the right tax almost immediately, making automated tax technologies and the ability to quickly and accurately collect tax data increasingly important. To be prepared for all of the changes coming down the pike in the next 12 months, tax leaders should work with the C-suite in evaluating these risks and developing an effective plan in response. Preparedness and information symmetry across any enterprise is key in today’s multi-faceted international tax ecosystem.
And in case you’re still wondering, Nomophobia describes the fear of being without your phone – it’s a mashup of the words “no,” “mobile” and “phobia.”
Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.