Deloitte has published a global tax policy survey, which revealed that tax and finance executives are grappling with the complexities of international tax reforms, increased transparency demands, and tax digitalization.
The survey highlighted that the increasing complexity and burden of tax reporting and data collection are primary concerns for tax and finance executives. Amanda Tickel, Deloitte's global leader in tax and legal policy, noted that while international tax reform, such as implementing a global minimum profits tax, remains significant, other priorities are demanding more attention. Transparency and reporting have emerged as top priorities, driven by heightened demands from various stakeholders and new public country-by-country reporting (PCbCR) requirements.
Approximately 70 percent of respondents anticipate an increase in public tax transparency disclosures in the coming years, with 37 percent expecting these disclosures to include new types of information. Additionally, 79 percent of respondents foresee being affected by transparency demands from climate and sustainability fields. Despite having tax transparency strategies in place, nearly all respondents (97 percent) face challenges in executing these strategies effectively.
Advancements in tax digitalization
Digitalization of tax processes remains a key focus, with the survey emphasizing the move towards Tax Administration 3.0, aiming to enhance compliance with fewer resources. Nine in ten respondents reported progress in their countries towards this model, anticipating benefits such as improved customer service (42 percent), more collaborative relationships with tax authorities (37 percent), and more efficient tax audits (36 percent).
However, concerns about the increased costs and complexity of digitalization persist, underlining the need for clearer government guidance on long-term benefits and implementation. The survey also highlighted the growing role of Artificial Intelligence (AI) in tax compliance, with 66 percent of respondents expecting AI to be widely used within three years, though significant human oversight is anticipated.
International tax reform and workforce mobility
The OECD's two-pillar approach to international tax reform continues to dominate the tax policy landscape. Respondents are preparing for the full implementation of Pillars 1 and 2, with mixed feelings about the impact on corporate tax rules. While 45 percent believe Pillar 2 will complicate tax rules, 38 percent expect simplification as existing laws are potentially repealed.
Workforce mobility and international remote working present new tax challenges, with 75 percent of respondents rating corporate tax implications as their top regulatory concern. Multidisciplinary teams may be necessary to address these issues holistically, encompassing tax, legal, and regulatory risks.
Climate and sustainability initiatives
Climate and sustainability initiatives continue influencing tax functions, with 83 percent of respondents expecting a significant impact. Environmental taxes, particularly on energy consumption, are anticipated to have the greatest effect. The EU Carbon Border Adjustment Mechanism (CBAM) poses additional compliance challenges, with nearly 80 percent of respondents expecting impact.
Willem Blom, Deloitte Global Leader, emphasized the importance of understanding business responses to these challenges, stating, "Our task now is to work with organizations on a global scale to shape effective responses and bolster their strategy, talent, and technology to meet the challenge."