Many tax professionals have felt less in control and more disconnected in recent years – and for good reason.
First, as business ventures deeper into an era of hyper-regulation, the magnitude and complexity of tax-related rules intensifies. Ernst & Young’s aptly named “2011-2012 Tax Risk and Controversy Survey” report contained numerous alarming statistics, including this one: The volume of tax information exchange agreements, among different countries, has increased by more than 1,000 percent.
Since that report appeared, the OECD’s Base Erosion and Profit Shifting (BEPS) plan has taken shape. Although BEPS, which we’ll discuss in more detail in upcoming commentaries, has yet to be finalized, it’s a safe bet that the agreement will represent the largest global taxation reform ever. Add that, despite the political gridlock in Washington, some form of tax change, combined with the increased use of technology by tax authorities, the perceived rise in audits, and the impact to corporate tax operations becomes increasing complex. Thus, the term “hyper-regulation” becomes clear.
The second reason relates to technology. We know from our research and discussions that many tax professionals feel they cannot keep pace with the increasing demands for tax data because so many financial systems are disconnected from the tax world.
To be sure, there are other reasons for feeling out of control. More organizations of all sizes are becoming global companies, and increasingly distributed organizations. Plus, the competition for tax talent continues to intensify, which means that most tax functions are doing more with less.
For tax professionals, the key question becomes how to assume and centralize control of distributed operations, and of tax data, regardless of which financial system it resides in. Addressing this question is something we’ve been discussing throughout our company for some time now.
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.