Tax World Report 2020 – How Technology, Responsibility and Diversity affect the Tax Market over the next decade

It’s not just about filling roles, it’s about driving real business growth.

The ball has dropped, the new decade has begun, and it’s time to look at your tax business. Is it built to face today’s challenges – the “ins and outs” of Transfer Pricing, fastchanging International Tax Regulations, other tax disciplines and all the nuts and bolts of sorting out problems when they arise?
In short, is it based on solving the problems that already exist — or is it built to seize the opportunities of a new decade?
Everybody talks a big game about technology integration and an increasing pace of change. But what about the opportunities that the changing tax landscape is going to offer to teams prepared to grab them?

Companies are bringing economic substance back home to stay compliant with ever more sophisticated anti-avoidance regimes. But they are still doing it in a way that is as efficient as possible. That’s the point.

Google’s recent announcement that it will move its intellectual property from the Virgin Islands to the USA is a sign of the times. But equally significant is their expectation that doing so will not affect their overall effective tax rate. What’s going on?

Tax teams that are properly equipped can have their cake and eat it— and even deliver business growth during these times of tax uncertainty.

The tax landscape may be harder than ever to predict, and at Mason Rak we believe there are three key pillars which will define the tax teams best prepared to survive and thrive in the face of the tax challenges of the 2020s. These three pillars are technology, responsibility, and diversity.

Everyone knows technology is the answer. But having the right tools is just the start – what is needed is the expertise to integrate them into the business
It’s no secret that, with the Wayfair decision in the United States, VAT introduction in the Gulf, and Brexit throwing up new customs and VAT borders in Europe, indirect tax is an area of growing complexity.

International taxation is the same story. The OECD is set on a revolutionary overhaul of the global international tax system, adding potentially huge complexity. The solution? Smart use of sophisticated tax technology to stay a step ahead of compliance.

Sophisticated economic modelling can even transform some areas of apparent challenge into zones of opportunity. As one example, we anticipate digitally focused firms to begin to optimise around digital services taxes in jurisdictions where they are in force, particularly France.

However, to grasp opportunities such as this, teams must have the right balance of skills to act quickly. Digitisation will continue throughout the 2020s and we are likely to see the explosion of direct-to-consumer sales, with formerly distributor-focused companies such as Goodyear now selling directly to consumers.

It’s going to become critical for companies of many kinds to upskill in indirect and tax technology areas even if these do not immediately seem relevant to their business models.

For this reason, we see the demand for tax tech experts (who have both a legal and a technical/ IT skillset in tax issues) remaining far higher than supply, despite employers scrambling to manage ongoing training.

Social responsibility extends beyond good corporate conscience and a sense of corporate mission is often a decisive factor for a candidate when choosing an employer.

Much lip-service is paid to corporate social responsibility. To keep high-quality people on board and motivated, companies will have to put their money where their mouth is. With labour markets tight, companies are competing to recruit talented candidates at all levels, and a sense of corporate mission is often a decisive factor for the best employees.

But responsibility extends beyond good corporate conscience and in tax it is mirrored by the wider trend of companies aligning substance with economic activity and striving to be good taxpayers. It also extends to tax transparency and full disclosure.

We think the compliance burden associated with operating in several regions is certain to increase as more sophisticated BEPS regulations make their way into domestic legislation. One example is country-by-country reporting (CbCR), which, having already been active in many markets, is now being rolled out throughout the Middle East.

These changes contribute further to an environment in which we anticipate many companies will reconsider the positioning of their economic substance in this region in order to adapt to a turbulent situation of changing TP rules.

There is no doubt that companies will need to get ahead of regulatory changes around economic substance requirements otherwise they risk not only being ensnared by the requirements when they arise, but also tarnishing their public image by appearing to be bad corporate citizens.

Responsible tax practices will need to take note of wider economic turbulence, too. In Asia-Pacific, for example, we expect regional economic flux to fuel demand for private wealth tax management in a range of growth markets as capital seeks surer returns against a potential slowdown. Only with deep market insight and an adaptable mindset tax teams can take advantage of such developments.

New OECD guidance has made the so-called mutual agreement procedure (MAP) more palatable to many governments and corporations. We expect 2020 to see an increasing use of MAPs in all regions. Companies will require specialist knowledge of these processes to shepherd them through the procedure

Tax teams will have to think flexibly: it’s not just about getting a good outcome in a tax dispute, but often also about avoiding such disputes altogether.

The efforts of groups such as the great Women in Tax (WiT) have helped remind the tax profession how important it is to harness the talents of previously underrepresented groups in the industry.

Truly, the bell has tolled for the old, stale, male-dominated, legal and accounting professions. The industry has begun making progress towards inclusivity and diversity.

For example, Saudi Arabia and Qatar will continue to fine-tune their VAT regulations, often releasing updates exclusively in Arabic, underscoring the need for capable personnel who can quickly interpret and implement new guidance to avoid confusion and disputes.

While this situation in the Gulf remains far from harmonised, companies will need the expertise to be able to adapt quickly to this uncertain and fast-changing environment. In our experience, when hiring tax specialists, companies and individuals in the region are increasingly expecting candidates to bring local expertise with them. We anticipate that this trend will continue in 2020.

Tax specialists will be expected to have ever more detailed knowledge of the jurisdictional and regional tax market and legislative landscape.

Mason Rak is a specialist global tax search firm and has been recognised by professional services clients as one of the world’s best.

We help our clients find tax leaders and build world class tax teams. By working with us you will instantly gain access to our specialist tax search consultants who are former tax professionals with in-depth market knowledge and unrivalled global network.

By leveraging their global tax network and market intelligence, Mason Rak again delivered a great result for us. We are fortunate to have them on our side.