Geopolitics, tax policy, and society in flux
As chief tax officers manage complexity and change in tax, it is important to take in the big picture. Geopolitical events and social trends under way today have the potential to drive the tax policy decisions of governments and the business strategies of global companies in the future. Chief tax officers should understand these developments so they can anticipate – and even influence – the potential effects on the business.
To help businesses to navigate these choppy waters, tax leaders should understand how geopolitical trends might play out, what threats might arise, and how exposure can be mitigated. Many companies are taking steps to manage their exposure by scenario planning – considering what is likely, what alternatives are credible, what is unlikely, and what is the worst case – so they can chart their best course forward. Tax leaders have an important part in these endeavours, to shed light on the tax angles of the strategic decisions being made.
Global Tax Reboot aims to provide an informative and insightful analysis of important geopolitical forces at work today and how they may transform the business environment and direction of tax policy in the years to come.
Three trends likely to reshape the global business landscape
Trend one
After decades of globalisation, the international order is splintering and governments are now prioritising safety and security over measures to promote prosperity and growth.
Trend two
International tax is a rare area where multilateral collaboration continues, with consensus being forged over fairer, more efficient tax rules. The consensus is fragile, however, and significant divisions over some of the rules still need to be bridged.
Trend three
Income inequality is worsening globally, leading to distrust of politicians and governments, and fuelling populist and protectionist attitudes.
Key takeaways for tax leaders managing through the reboot
Keep up with geopolitical forces and trends
These developments will have implications for tax policy, and being up to speed can help to put chief tax officers in the best position to steer their organisation’s response.
Seek to build and work connections like never before
This includes:
Professional peers, advisers, academics, and non-governmental organisations to engage with on emerging issues, social currents, and political trends;
Tax authorities and policymakers to take part in tax policy debates to make sure business issues are heard; and
The C suite and senior management across the company to explain the sources of tax risk and highlight opportunities.
Consider a risk governance framework
This may optimise opportunities to contribute to business strategy, build the team’s profile, and contribute to the business’s sustainability and success.
Read the original version of this article on KPMG’s website: Global Tax Reboot.
Access more KPMG Future of Tax content here.
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