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Three steps to help tax teams prepare for 2023 year-end

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Tax teams must analyze recent changes within their business, review the latest legislation, and proactively meet stakeholder demands.

In brief
  • Macroeconomic changes are impacting businesses, adding a layer of complexity as tax teams close out the calendar year.
  • Tax teams should monitor new and changing legislation and react in a timely manner as a part of their year-end process.
  • Government and other stakeholders are demanding increased transparency. It’s up to tax teams to respond to these demands as part of year-end close.

With 2023 quickly coming to an end, tax departments should prepare to finish the year efficiently and accurately while managing risks related to financial reporting and compliance processes.


Current geopolitical disruptions, persistent inflation and higher interest rates, as well as rapidly-evolving tax legislation, introduce potential complexities to 2023 tax provisions — such as additional required analysis related to interest deductibility and tax attribute carry forwards, valuation allowance analysis and conclusions, and consistent and complete inclusion of new legislation throughout all components of a tax provision. Additionally, talent and budget constraints pose challenges for many companies seeking to accelerate the close pro

Here are three action tax teams should take as they approach year-end 2023 and look ahead to 2024.



1. Respond to transactions and business developments

Due to changing macroeconomic and geopolitical changes, many organizations are making business decisions that involve new products or services, updated business models, acquisitions or dispositions and internal restructurings. Further, uncertain economic forecasts and elevated interest rates have heightened the need for effective cash management along with refinancing and deployment of capital to new focus areas of the business.

Tax accounting and reporting for business changes like these often disrupt routine processes and strain tax teams that are already stretched to meet normal demands. For instance, historical assertions on measurement and realization of deferred tax assets, reinvestment of subsidiary earnings, recognition and measurement of uncertain tax positions, and intercompany arrangements often require additional analysis following business developments and transactions. As elevated inflation and interest rates drive up the cost of capital, companies may need to reconsider realizability of deferred tax assets and reassess reinvestment implications of meeting global cash requirements.

Ideally, tax teams should be involved from the onset when business developments and transactions are being evaluated. Tax teams should liaise with the business and Mergers & Acquisition team now if these strategic decision items — such as acquisitions, dispositions, restructurings, changes to supply chains and operation models, and changes to capital structures and deployment — are being contemplated for next year. That way, the tax teams can help gather the appropriate data points needed to model the impacts to effective tax rates, cash taxes and deferred tax accounts.

2. Monitor changing tax regulations

Tax legislation is evolving rapidly around the world. Tax laws and regulations are often complex and require careful consideration of facts and circumstances to determine the appropriate application of such rules. Adapting to tax legislative changes requires a keen understanding of tax policy and administration and an ability to analyze timely the financial statement implications of these changes.

For instance, the Organisation for Economic Co-operation and Development (OECD) inclusive framework on Base Erosion and Profit Shifting (BEPS) issued Pillar Two Global Anti-Base Erosion (GloBE) Model Rules and related guidance (collectively, GloBE rules). The GloBE rules introduce a new, complex 15% global minimum tax regime applicable to multinational enterprises with consolidated revenues of EUR750 million or more. More than 50 countries and tax jurisdictions are in various stages of legislating the GloBE Model Rules into local law, with some law changes effective on or after December 31, 2023 (i.e., from 1 January 2024 for entities with calendar year-ends).

To be ready for the laws’ effectiveness, tax teams should be taking several steps, including:

  • Conducting a BEPS 2.0 impact assessment
  • Identifying material jurisdictions that will be focused on for purposes of the group GAAP tax provision calculations
  • Identifying data providers and assessing data points needed for the Pillar Two calculations
  • Meeting with external financial statement auditors
  • Aligning with stakeholders on financial statement disclosures

In addition, legislative activity relating to tax incentives in the form of refundable and transferable tax credits (e.g., the US Inflation Reduction Act, enacted in August 2022) is also on the rise. These incentives serve as a form of financial assistance to businesses, encouraging activities that align with government policy objectives, such as promoting renewable energy, job creation, or research and development. The tax accounting for these incentives is often complex and requires an evaluation of the terms and conditions of each incentive.

As tax teams close out the year, they should assess and evaluate each incentive by the terms and conditions. Even if they’ve already started this process, it’s important to go over all the fine print to understand details and assess the applicable accounting to determine, in particular, if such incentives are accounted for under income tax accounting standards or under other accounting standards. 

Additionally, looking ahead to 2024, tax teams must have strong processes in place to ensure they remain aware of tax legislative developments and work proactively to analyze the impact of new laws before they are enacted or effective.

3. (Re)define tax transparency

Finally, beyond traditional financial reporting and tax compliance, multiple stakeholders — including regulators, investors, employees and customers — are demanding greater transparency on tax matters. For example, the US Financial Accounting Standards Board is nearing completion of a project to enhance financial disclosures over income taxes (via US) that will provide additional details on jurisdictional effects of companies’ tax provisions.

Further, multiple sustainability (or environmental, social and governance (ESG)) reporting standards include guidance on disclosure of tax matters (e.g., total taxes paid, country-by-country reporting, and a company’s strategy on tax matters). While various tax authority and regulator policy agendas include expanded tax disclosures on country-by-country reporting and tax risk management efforts.

Tax teams should be looking at all of these disclosure requirements — both for 2023 and 2024 — and assessing if they have all the data to comply with these disclosures. Now is the time to ensure procedures are in place to monitor the broader regulatory and policy initiatives that are expanding tax transparency and to prepare for increased reporting and public disclosure on tax matters.


As 2023 concludes, tax teams should remain focused on identifying and responding to the various business and tax matters their companies have encountered during the year, while continuing to monitor and prepare for the latest tax law and policy developments. By thinking strategically, anticipating major changes and modelling potential impacts through a risk-based lens, tax teams can reduce the impact of year-end challenges and timely communicate key matters to relevant stakeholders to deliver a successful 2023 year-end close and get a head start on 2024.

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