2 minute read 24 Feb. 2021
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How private businesses can best prepare for global tax risk

By Steven Shultz

Global EY Private Tax Leader

Service mindset. Passionate supporter of perfect careers. Builder.

2 minute read 24 Feb. 2021
Related topics Tax EY Private

Following four steps will help leaders move the organization in the right direction.

In brief
  • Substantial tax changes and enforcement are expected globally following increased government spending due to the COVID-19 crisis.
  • Private businesses should anticipate tax increases, tax code revisions, and stricter enforcement and need to prepare for their response.
  • Following these four steps will help private businesses to manage their response and help move the organization forward.

In response to the COVID-19 pandemic, governments took swift steps to support people, businesses and overall economies – from the Payment Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) assistance for struggling organizations to stimulus payments that encouraged consumer spending – which collectively totalled approximately US$20 trillion. The challenge now: how to pay for it.

The global tax community expects to see substantial tax changes and enforcement to help recoup this spend across all levels of government. Businesses should anticipate tax increases, tax code revisions, and stricter enforcement to address high debt situations. Organizations will need to keep an eye on the evolving cross-border landscape, particularly on the potential global minimum tax, digital services taxes, as well as climate levies, consumption taxes, and taxes on wealth and financial transactions.

To prepare for what tax consequences may lie ahead, private businesses need to develop a globally focused business strategy centered around tax risk management.

“To navigate the post-COVID-19 pandemic landscape with confidence, and whatever this “new normal” may look like, tax strategy will need to ensure that you have the right people, the right processes and the right technology to propel your business forward, seizing all available opportunities to reduce risk,” says Jean-Pierre Lieb, EY EMEIA Tax Policy and Controversy Leader.

Lieb recommends taking the following four steps to help move the organization in the right direction in the current climate:

  • Ensure that the organization has enough people, with the right skills, to support the company’s mission, growing tax compliance requirements and potential risks.
  • Upskill the workforce to prepare it for the anticipated changes, particularly on tax administration technology.
  • Co-source some or all of the routine tax compliance or controversy functions.
  • Implement technology platforms that identify and manage risk, deliver taxpayer data in real or near real time, and provide high levels of transparency, visibility and control.

Taking proactive steps now will help organizations prepare for the changes sure to take place in the near future. 

Summary

The pandemic has escalated private business global tax risk. In response to this, private businesses need to develop a globally focused business strategy centered around tax risk management. 

About this article

By Steven Shultz

Global EY Private Tax Leader

Service mindset. Passionate supporter of perfect careers. Builder.

Related topics Tax EY Private