32 minute read 25 Apr 2019
Small business owner checking financial documents

How tax is transforming as a core business function

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US Americas

Multidisciplinary professional services organization

32 minute read 25 Apr 2019
Related topics Tax Trust Growth Digital Workforce

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Disruptive technologies, transparency and more are impacting the future of tax. Find out how in our video series.

Disruptive technologies and unprecedented global transparency are helping to accelerate changes in the way businesses manage tax. In almost every way, the tax function of tomorrow will look very different than it does today.

Having an informed view of tomorrow is vital. Here, EY professionals discuss the future of tax and what it means for companies now in eight areas where business is transforming.

1. The future of the tax function

Tax functions, coping with rapid regulatory and legislative change and pressure to do more with less, have to transform themselves. This means deciding how to prioritize cost, value and risk when it comes time to invest in talent and technology to operate optimally in the future.

2. The future of tax controversy

Tax controversy has seen a global surge in volume and intensity. Governments are collecting more information than ever before and are using enhanced data analysis to identify and act on tax issues. Governments are also sharing this information at a record-setting pace. This increased interconnectivity means that tax controversy in one country can now quickly spread and intensify.
 

3. The future of the contingent workforce

Technology has fundamentally altered the nature of how we work and has created a fast-accelerating gig economy —one that relies on freelance or contract workers. By the year 2020 alone, almost one in five workers will be a contingent worker and it is expected that 50% of the workforce will be contingent workers by the year 2030.

This shift can greatly complicate tax issues for both countries and companies.

4. The future of digital tax administration in corporate income tax

Tax authorities around the world are using sophisticated digital platforms that require taxpayers to submit data in real time or near-real time. This is changing the way businesses collect, format and report tax information, and it accelerates their reporting and filing obligations.

5. The future of digital tax administration for indirect taxes

From invoicing to tax returns, the technological demands by indirect tax authorities are increasing.

Businesses are catching up and discovering how they, too, can use digital tools to improve processes and improve the bottom line by taking steps including working to better collect value-added tax and goods and services tax refunds they are owed.

6. The future of the value chain

Digital disruption is permanently changing value chains, and businesses are wrestling with the tax implications of those changes. Consider: how much profit from a transaction that uses artificial intelligence can be attributed to an algorithm versus a person?

If a product that once was shipped across borders can now be printed instead, where is the tax due?

7. The future of blockchain

Blockchain may be best known today as the technology that underpins the digital currency bitcoin, but it can also be used for a host of other purposes that involve transmitting data securely.

Blockchain technology represents nothing less than the second generation of the internet.
Alex Tapscott
CEO of consultancy Northwest Passage Ventures and co-author of the book Blockchain Revolution

8. The future of data analytics

Sophisticated but business-friendly analytic tools now allow tax departments to leverage data to manage risks, control costs, identify opportunities and enhance business decisions. At the same time, increasing numbers of tax authorities are using data analytics to mine even more data to help increase tax collections and target compliance initiatives.

Summary

Technology is instrumental in the new way businesses manage tax. The use of digital tools, robotics, blockchain and data analytics tools is now a necessity for leading businesses to secure their future. 

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By

US Americas

Multidisciplinary professional services organization

Related topics Tax Trust Growth Digital Workforce