Transparency and Reporting tops as currently having the most impact on Tax Leaders Worldwide

Deloitte conducted the 2024 Global Tax Policy Survey between March and April 2024, gathering responses from 1,012 professionals, including tax leaders (69%), CFOs (28%), and other executives (3%). The survey covered 28 countries and included industries such as consumer goods, energy, technology, financial services, and healthcare. All companies represented in the survey had a minimum of $100 million in global annual revenue, with 90% being multinational organizations. The survey aimed to capture the views, concerns, and actions of companies regarding various tax policy reforms and trends shaping the global tax landscape.

The 2024 Global Tax Policy Survey delves into five central themes that are redefining tax practices worldwide. In light of the increasing focus on artificial intelligence (AI) and generative AI (GenAI) in tax discussions, respondents were also asked to evaluate the impact of these technologies alongside the main themes. The results offer a glimpse into the challenges and opportunities that lie ahead for multinational enterprises (MNEs) in the rapidly evolving tax environment.

RANKING THE IMPACT OF GLOBAL TAX POLICY THEMES

Survey respondents ranked the impact of the five primary tax policy themes as follows:

1. TRANSPARENCY AND REPORTING

At the top of the list is the growing demand for transparency in tax reporting. Companies are increasingly pressured to disclose comprehensive information about their global tax management practices, covering compliance, planning, governance, and risk across all jurisdictions. This focus on transparency is driving many companies to go beyond the minimum reporting requirements, aiming to provide stakeholders with a clear understanding of the context behind their tax data. The survey highlights that most companies already have tax transparency strategies in place, though they face challenges in executing these plans, particularly in aligning efforts across departments to meet the expectations of the broader environmental, social, and governance (ESG) discussions.

2. DIGITALIZATION OF TAX

The digitalization of tax processes is recognized as a growing trend, with many respondents acknowledging progress towards a more automated, seamless tax environment—referred to as Tax Administration 3.0. While there is optimism about the benefits of digitalization, such as the potential of GenAI in tax compliance, there is also caution due to concerns about increased costs and complexity. The slow pace of regulatory development for AI in tax may be contributing to this cautious outlook. However, there is widespread support for initiatives like the EU VAT in the Digital Age proposal, which promises to simplify compliance through harmonization and alignment of digital tax processes.

3. INTERNATIONAL TAX REFORM

Despite the significance of international tax reforms, particularly Pillar Two of the OECD’s global tax framework, respondents ranked this theme lower than might have been expected. This may be attributed to the fact that the full impact of these reforms has yet to be felt, with many of the changes not coming into effect until 2025. Nonetheless, the survey indicates that the momentum behind Pillar Two is growing, with many companies anticipating its implementation in the near future. The responses suggest a division between those who expect the reforms to increase complexity and those who see them as an opportunity to simplify and streamline international tax compliance.

4. THE FUTURE OF WORK

The rise of international remote work presents a new set of challenges for tax leaders, particularly in managing the tax and legal risks associated with increased employee mobility. Corporate tax implications are the primary concern for most respondents, followed closely by employee tax and social security issues. The survey reveals a strong demand for clearer guidance and harmonization of tax rules related to cross-border remote work, emphasizing the need for a multidisciplinary approach that considers the full spectrum of legal and regulatory risks.

5. CLIMATE AND SUSTAINABILITY

Climate and sustainability issues, while ranked last, remain a significant concern for tax leaders. The lower ranking may be due to the discretionary nature of ‘green’ tax incentives and the reliance on other measures alongside tax policies to address environmental challenges. Taxes on energy consumption are having the most significant impact, while taxes on waste and pollution are seen as less influential. The survey also highlights the tension between the theoretical benefits of carbon-pricing regimes and the practical challenges of implementing these systems, such as high compliance costs and complex legislation.

A COMPLEX FUTURE WITH EMERGING OPPORTUNITIES

The survey underscores the complex and dynamic nature of the global tax landscape. While Pillar Two of international tax reform represents a major shift, the immediate impact of tax transparency and digitalization is currently more pronounced. These themes are deeply interconnected, with Pillar Two generating new reporting obligations and MNEs turning to technology to manage the resulting data complexities. The growing demands for tax transparency and the associated reporting burdens are competing with core business activities for resources and attention.

Tax leaders are cautiously optimistic about the potential benefits of digitalization, particularly in areas like e-invoicing, but they recognize the need for governments to provide clearer guidance and roadmaps for the implementation of new technologies like AI. The future of work, with its associated corporate tax challenges, calls for a holistic approach that addresses not just tax, but also immigration and employment law. Finally, while climate and sustainability issues may currently rank lower in terms of impact, they are likely to remain a core concern as environmental policies and regulations continue to evolve.

SOURCE/RECOMMENDED READ: 

• 2024 Global Tax Policy Survey | Deloitte