Component 7

Global Tax Outlook 2020

overview

REGIONAL OUTLOOK

1) There are high levels of uncertainty in every region surrounding the development of tax legislation and keeping up with new regulations is a top three priority consistently in each region. The second most significant priority varies. However, levels of uncertainty and expectations of change differ. In the Americas 80% say the focus of tax legislation changes constantly and is difficult to predict; in Asia-Pacific 64% say changes in tax legislation are sound and largely predictable. Views about the effectiveness of authorities in combatting tax avoidance and evasion also vary.

2) Staying compliant, given increased demands to submit more detailed tax information is the leading top three tax issue across the globe. The second most significant issue differs by region. Board / Executive committees have spent more time on tax compliance and planning issues in the past 12 months – especially in the Americas. And, there are differences in the approach to tax governance, especially in Asia-Pacific. 57% in Asia-Pacific have changed their approach to tax governance in part as a response to tax authorities, and their scrutiny.

3) Tax leaders aspire to move from a support function to become more integrated with the business, despite the continued dominance of the compliance agenda – the Americas having the greatest ambition. Organisations expect tax risk management and tax governance to be fully embedded in their organisation in two years, or to be managing tax risk proactively, but not fully integrated with business processes. EMEA is further ahead currently, while the Americas are the most ambitious, expecting to overtake EMEA. As the tax function evolves, the number of in-house professionals dedicated to tax and compliance tasks is expected to increase over the next 5 years. The increase is most marked in the Americas. Total tax liability, an understanding of and visibility into the sum of all the taxes a business owes at any point in time, is an increasingly familiar concept, but not all regions engage with the concept equally and many organisations fail to calculate it effectively. The Americas are furthest ahead.

4) Tax technology is a key component of managing compliance more effectively and delivering value. The Americas are taking more of a strategic approach and levels of technology adoption there are highest. Spend and areas of application vary. In EMEA and the Americas, technology to meet tax authority digitisation obligations is the most frequently adopted technology. In EMEA, these technologies are having the greatest impact on the tax function. There are a range of challenges that organisations face in implementing tax technology. Tax leaders in the Americas feel these barriers more acutely than their peers in other regions.

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EMEA highlights

In EMEA there are high levels of uncertainty around the development of tax legislation, particularly among non-OECD countries. Non-OECD countries are also more likely to say tax authorities are ineffective at combatting tax avoidance and evasion.

Compliance and keeping up with new regulation dominate the EMEA tax agenda, followed by managing and avoiding potential tax disputes - a more significant issue for EMEA than other regions.

The tax function is evolving. The expectation is of a significant shift from a compliance focus to tax as a ‘business partner’, in OECD EMEA. Tax governance and risk management is becoming further embedded in business processes across EMEA.

Total tax liability is a familiar concept to many in EMEA although slightly less than in other regions

Tax functions in EMEA are making modest investments in tax technology. Technology to meet tax authority digitisation is the most frequently adopted technology and has the most impact

REGIONAL HIGHLIGHTS

The Global Tax Outlook has pointed to consistent themes that face the leaders of tax wherever they are based, as well as specific trends in key regions of the world. Regional findings are explored in more depth in the BDO Regional Tax Outlook 2020. Read on for the updated highlights, then read the report.

Listen to part of an interview with Robert Aziz, BDO’s Global Head of Tax, on regional highlights from the research.

Domestic and international tax legislation is constantly evolving. Tax laws and regulations are complex, and tax authorities around the world are becoming more vigilant.

In the Americas there are particularly high levels of uncertainty. 80% say the focus of tax legislation changes constantly as the result of the elected party or is difficult to predict and 67% that authorities are inconsistent in the interpretation of tax law.

Adjusting to tax reform, keeping up with new regulation and staying compliant are highest on the tax agenda.

The tax function is expected to evolve as tax leaders aspire to move from a support function to business partners. The shift towards tax governance and risk frameworks embedded in the business, is more pronounced in the Americas. The number of in-house professionals dedicated to tax is set to double.

Total tax liability is a more familiar concept and its application is expected to grow.

Organisations are more likely to have a tax technology strategy in support of business objectives. Tax tech spend is low but expected to grow quickly. Tax technology is used most to support indirect and direct tax compliance and meet tax authority digitisation obligations – and more advanced applications are more evident.

the americas highlights

In Asia-Pacific the development of tax legislation is deemed to be more predictable and tax authorities more effective at combatting tax evasion relative to other regions.

Staying compliant given the increased scrutiny of tax authorities is a major concern for Asia-Pacific organisations.

The tax function is evolving in Asia-Pacific, although it is at a different level of maturity today relative to global peers.

Board engagement with total tax liability is lower in Asia-Pacific than other regions and is expected to grow more slowly.

Tax functions are making modest investments in tax technology and appear to be in the early stages of utilisation and application. Organisations are less likely to have a documented tax technology strategy in support of business objectives than their global peers, and current spending on tax technology is low and is expected to remain modest.

ASIA PACIFIC highlights

READ THE US TAX OUTLOOK

BDO’s Global Tax Outlook research echoes the findings of BDO’s US Tax Outlook research, undertaken annually by BDO in the US, with some small variation.

BDO undertakes annual research among tax leaders in the US and publishes the BDO US Tax Outlook in the Winter of each year. The latest US research was undertaken in November 2019, prior to the COVID19 crisis. The timing of the US survey and small differences in organisational profile, make direct comparisons between the two studies inadvisable, however the direction of the findings are consistent, and also echo many of the results we see for the Americas region in the Global Outlook research:

Globally there are high levels of uncertainty around the development of tax legislation. US tax functions also highlight federal tax reform and legislative change at state and local level as a primary issue.

The Global Tax Outlook Survey indicates that the use of Total Tax Liability, an understanding of and visibility into the sum of all the taxes a business owes at any point in time, is mixed, with the Americas being more engaged with the concept than most. In the US Tax Outlook US organisations understanding and engagement with total tax liability is similarly more advanced. In part, this will reflect the need in US to manage multiple layers of taxation – at local, state, and federal levels.

The Global Tax Outlook points to a mixed view on the investment and spend in tax technology. The US Tax Outlook findings suggest that US businesses are further along in their tax technology journey. However, the tax technology challenges are similar.

US TAX OUTLOOK

READ THE REGIONAL TAX OUTLOOK REPORT

about the regions

The Americas had a slightly higher proportion (42%) of larger organisations (revenue greater than $500 million), than other regions. EMEA and Asia-Pacific had a higher proportion of smaller organisations (revenue less than $20 million) and medium sized organisations (revenue $20 -$500 million).

Learn more about our participants

READ THE REGIONAL TAX OUTLOOK REPORT

EMEA (from non-OECD countries)

EMEA (from OECD countries)

Asia-Pacific

Americas

35%

33%

14%

18%

256

finance and tax leaders from over countries participated in the research – with a spread across region, size and type of organisation and industry sector.

Global Tax Outlook 2020

256

finance and tax

leaders from over

participated in the research – with a spread across region,

size and type of organisation and industry sector.

countries

More than a third expect compliance and planning issues to consume more Board time in future. The expectation is highest in OECD EMEA countries

For the majority, the Board has spent more time on tax compliance in the last year.

The tax function is evolving in parts of EMEA .

Adjusting to tax reform, keeping up with new regulation and staying compliant are highest on the tax agenda.

RELATED US INSIGHTS: AMERICAS REGIONAL ANALYSIS

READ THE REGIONAL TAX OUTLOOK REPORT

RELATED US INSIGHTS: AMERICAS REGIONAL ANALYSIS