SYSTEMIC DRIVERS OF CHANGE - A foresight report into the next decade for taxation

 
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SYSTEMIC DRIVERS OF CHANGE
A foresight report into the next decade for taxation

In late 2013 and early 2014, the ATO undertook a research study with
thought-leaders and practitioners in both the tax/superannuation industry
and the tax administration.

The research sought to understand strategic drivers that will lead to important and sometimes
fundamental shifts in the taxation environment.

A number of themes emerged that, if they are realised as expected, will affect all parts of the
taxation ecosystem.

The Australian Tax Office (ATO), business, and the tax profession will need to respond to
new these challenges and opportunities, and these responses will need a mix of evolved
approaches and sometimes entirely new thinking to optimise compliance and ensure a
healthy, effective taxation regime that delivers a fair revenue outcome.
Section 1

 Key drivers affecting taxation
 in the next decade

              A more complex world
                                                                         Multi-                                                          A changing                              An
         COMPLEXITY                                                                                       Disruptive
                                                            =           country                   +      technology             +        professional                +         engaged
             and a more sophisticated                                   business                                                          capability                            public
                  administration

                                                                “The end of geography”                “Everything is digital”         “Evolve or die”                    “The amplified conversation”
                                                                The trend towards business            The next decade will be         The tax profession will            Public expectations on both
                                                                that is unrestricted by borders       characterised by continuing     undergo fundamental shifts         the tax system and corporate
Complexity /kəmˈplɛksəti/ noun The number of
                                                                will continue to intensify,           innovation on conventional      in both its business model         contribution will continue to
variables that have to be dealt with in a given time in a
                                                                presenting new challenges             approaches as result of         and its workforce, resulting       evolve, with an engaged public
situation, the clarity and precision with which they can
                                                                that typically go beyond the          disruptive technology and the   in a changing professional         voice becoming increasingly
be identified, and their rate of change (Jaques, 1996)
                                                                boundaries of country and             exponential growth of data,     capability in Australia.           enabled and amplified by new
Tax is a complex system. It is part of a network of             region.                               integration and technology-                                        channels, information sources
global social and economic systems that are inter-                                                    enabled business models                                            and modes for formal and
connected, non-linear, interdependent, and evolving.                                                                                                                     informal community-driven
Over the next decade, this complexity is set to                                                                                                                          campaigns.
intensify, affected by four major drivers of change that
will create new tensions, opportunities and balance
points.
Some of these drivers are already emerging, others are
strongly indicated by current trends and forecasts. By
understanding how they converge and the shifts they
will set in motion, we can gain a more sophisticated
understanding of the future landscape of taxation.
The next decade promises a tax
environment of increasing                                               The pursuit of
                                                                          consistent                     Greater
                                                                                                    synchronisation
complexity for all players.                                               treatments
                                                                        across borders              of law regionally
                                                                                                                                                                                 Increased
                                                                                                                                                                                surveillance
                                                                                                                                                                                                                               Innovative
                                                                                                                                                                                                                             approaches to
                                                                                                                                                                                                                              compliance
This complexity will be driven by shifts right
across the taxation ecosystem. Some of these
shifts are already emerging, others are strongly
                                                                             Increasingly globalised
indicated by current trends and forecasts.                                      regulation (BEPS)
                                                                                                                    Supply and                                  Big data
                                                                                                                    demand of                                                                                                   New
                                                                                                                                                                                                 Business in the
                                                                                                                    intangibles                                                                                              methods
                                                                                                                                                                                                     cloud
                                                                                                                                       Multi-                                                                               of avoiding
                                                                                                                                  national/multi-                                                                               tax
                                                                                                                                    company
                                                                                                                                  supply chains                                                                                                      Pre-filling

                                                      Increasing
                                                    transparency                                                                                                                                           Increased
                                                     obligations                                                                                                                                        business and tax
                                                                                 Global and                                                                                                                 software
                                                                                regional tax                                                                         Disruptive                           integration
                                                                                   policy
                                                                                cooperation                 Multi-country                                           technology
                                                                                                             business                                                                                                                        Low-burden
                                                                                                                                                                                                                                               report
                                                                                                                                                                                                                                             generation
                                                Global
                                                 trend
                                               towards                      Increasing                                                                                                         Macro shift from
                                             indirect tax                     mobility                                                                                                          digital migrants
                                                                                            Growing need
                                                                                           for international                             A more complex world                                  to digital natives
                                                                                              know-how
                                                                                                                                  COMPLEXITY
                                                                                                                                       and a more sophisticated
                                                                                                                                            administration                                                           Changing
                                                                Growth of                                                                                                                        Activist &         expectations
                                                                  online                                                                                                                        empowered
                                                                education                                                                                                                       communities
                                                                                          Offshoring work

                                                                                New                                                                                    An                                      Shifting
                                                                                                                                                                                                               political                  Harnessing new
                                                                             models of
                                                                            compliance                         A changing                                            engaged                                   priorities                 channels and the
                                                                                                                                                                                                                                           media to drive
Key                                                                          regulation                        professional                                           public                                                                compliance
                                                                                                                                                                                                                                             behaviour
                                                       Broadening of
                                                      advisory beyond
                                                                                                                capability
                                                            tax                                                                                                                            Tax vs. goodwill
             The size of each circle                                                                                                                                                         contribution

 Driver      reflects the impact of                                                                                                       Diminished
                                                                                                Leakage of                                                        Economic                                              Build and
             the driver/response,                                                               knowledge
                                                                                                                                             entry
                                                                                                                                                                  uncertainty                                            support
                                                                          Tax workforce                                                                                                                                public value
             and the certainty/                                               model
                                                                                                   and
                                                                                                experience         Generation                                                                                             of tax
             frequency with which                                          innovation                               change

             it was identified                                                                                                                                                    Focus shift to
Possible                                                                                                                                                                        ethics & corporate
response                                                                                                                                                                           governance
The end of geography:
multi-country business
The trend towards multi-country business will
continue to intensify, presenting new challenges that
typically go beyond the boundaries of country and
region.
                                                                                                   The pursuit of
                                                                                                                                        Greater
This trend will drive a range of challenges for tax administrations                                 consistent
                                                                                                                                   synchronisation of
                                                                                                    treatments
needing to tax increasingly globalised value chains and market                                    across borders                     law regionally
offerings. At the same time, new expertise will be needed to navigate
the complexity of sophisticated international arrangements and the
ongoing rise of intangible, Intellectual Property based goods and
services.

                                                                                                         Increasingly globalised
                                                                                                                                                    Supply and                                      Big data
                                                                                                            regulation (BEPS)
                                                                                                                                                    demand of
                                                                                                                                                    intangibles

                                                                                                                                                                  Multi-national
                                                                                                                                                                  supply chains

                                                                              Increasing
                                                                            transparency
                                                                             obligations
                                                                                                             Global and
                                                                                                         regional tax policy                                                                              Disru
                                                                                                            cooperation
                                                                                                                                           Multi-country                                                 techn
Key questions
                                                                                                                                            business
• How will we respond to an interconnected world to ensure that we
                                                                         Global trend
  collect our fair share of revenue and assure compliant behaviour in      towards
  complex circumstances?                                                 indirect tax                  Increasing
                                                                                                         mobility
                                                                                                                        Growing need for
                                                                                                                          international                                   A more complex world
• How do we fairly tax new and emerging forms of value – from hosted                                                       know-how
  services to IP-based goods and from globally distributed                                                                                                            COMPLEXITY
  manufacturing to global chains of supply?                                                                                                                              and a more sophisticated
                                                                                                                                                                              administration

• Where will we get or grow the expertise and relationships we need to                     Growth of
  mange our response?                                                                        online
                                                                                           education                  Offshoring work

                                                                                                          New
                                                                                                        models of
Multi-country business

Readily available technology and a globalised economy means that countries will be more
interconnected than ever over the next decade.
Having to deal with global, in addition to local, competition stimulates businesses to globalise,
both mobilising resources and providing goods and services across borders. Additionally,
companies have sought to exploit opportunities to minimise their tax obligations by structuring
themselves across often fragmented regulatory regimes. These trends have and will continue to
grow as a significant force in shaping the tax system and policy/administrative priorities over the
next decade.

Growing need for international know-how
Businesses with global subsidiaries, suppliers or customers will increasingly need a mixture local and foreign tax
and business advisory services to navigate the complexity of multiple revenue systems. They will seek to minimise
their cost of compliance and optimise their tax bill. In order to stay competitive, tax practitioners will increase their
capability with both local and foreign tax systems, and with general (e.g. labour) or specialist (e.g. agriculture)
business arrangements.

Supply and demand of intangibles
Technological innovation and the increasing ease of accessing new digitally-delivered services from cloud data
hosting to 3D printing will fuel the demand for intangibles and present novel challenges for tax reporting,
                                                                                                                                                     The pursuit
administration and policy.                                                                                                                          of consistent
                                                                                                                                                     treatments
Multi-national supply chains                                                                                                                           across                  Greater
                                                                                                                                                                                                                                   In
Foreign outsourcing and multi-national subsidiary arrangements have already and will increasingly emerge as a                                          borders              synchronisatio
                                                                                                                                                                                                                                   su
staple business process. Value chains and transactions that span countries challenges the ability for countries to                                                             n of law
                                                                                                                                                                              regionally
capture a fair amount of tax over the course of the value adding process that results in a good or service.

Global and regional tax policy cooperation
Governments will increasingly rely on global and regional solutions to taxation to reduce the opportunity for                                      Increasingly
companies to use multi-country supply chains and digital delivery to avoid paying tax. This may include new treaties,                               globalised
                                                                                                                                                regulation (BEPS)                                                   Big data
harmonised policies, increased data sharing and other approaches driven by initiatives such as Base Erosion and                                                                      Supply and
Profit Shifting (BEPS). This will require new knowledge and skillsets within the tax industry and the ATO, and will                                                                  demand of      Multi-
                                                                                                                              Increasing
trigger market responses as businesses reshape their compliance and their tax strategies.                                   transparency                                             intangibles   national
                                                                                                                             obligations                                                           supply
Increased mobility                                                                                                                                                                                  chains
As it becomes easier for individuals to move across borders, taxation will become increasingly complex to manage.                                           Global and
Australians travelling overseas who earn a salary or business revenue will need to navigate multiple tax systems.                                          regional tax                                                   Disru
                                                                                                                                                              policy
Foreigners in Australia who own foreign businesses but use Australian tax-funded public services may not make a
                                                                                                                                                           cooperation
                                                                                                                                                                                                                         techn
contribution. To deal with these complexities and disparities, governments will need to develop strategies to respond                Global
                                                                                                                                      trend
                                                                                                                                                                                     Multi-
appropriately (for example, by increasingly applying indirect taxation).                                                            towards                                         country
                                                                                                                                    indirect
                                                                                                                                        tax                                         business

                                                                                                                                                    Increasin                                            A more complex world
                                                                                                                                                    g mobility
                                                                                                                                                                    Growing need
                                                                                                                                                                         for                         COMPLEXITY
                                                                                                                                                                    international                       and a more sophisticated
                                                                                                                                                                     know-how                                administration

                                                                                                                                               Growth of
                                                                                                                                                online
Global and
                                                                                                          regional tax policy

Evolve or die:                                                                                               cooperation
                                                                                                                                             Multi-country                                     Dis
                                                                                                                                                                                              tech
                                                                                                                                              business
a changing professional
capability                                                                  Global trend
                                                                              towards                    Increased
                                                                            indirect tax                  mobility
                                                                                                                        Growing need for
The tax profession will undergo fundamental shifts                                                                        international                       A more complex world
                                                                                                                           know-how
in both its business model and its workforce,                                                                                                                COMPLEXITY
resulting in a changing professional capability in                                                                                                           and a more sophisticated
                                                                                                                                                                  administration
Australia.
                                                                                           Growth of
                                                                                             online
These will be driven by a range of trends that include cross-border                        education                      Offshoring
                                                                                                                             work
outsourcing for both routine and, ultimately, more complex tax work,
and generational shifts that will greatly change the industry’s profile.                                     New                                                                              A
This creates an uncertain future position for the profession that will                                    models of
                                                                                                         compliance                           A changing                                    enga
affect not just the industry but the tax administration that relies on it                                 regulation                                                                         pub
as a trusted intermediary.                                                                                                                    professional
                                                                              Broadening of                                                    capability
                                                                             advisory beyond
                                                                                   tax

                                                                                                                                                              Diminished
                                                                                                                                Leakage of                                               Economic
                                                                                                                                                                 entry
                                                                                                                                knowledge                                               uncertainty
                                                                                                       Tax workforce               and
                                                                                                           model                experience      Generation
                                                                                                         innovation                              change

Key questions

• How can we effect a meaningful compliance regime in an increasingly
  globalised tax preparation and advisory supply chain?

• What is the appropriate administrative response to a potentially
  diminishing professional tax capability in Australia?
Global and
                                                                                                                                                      regional tax           Multi-
                                                                                                                                                         policy
                                                                                                                                                                            country                                         D
                                                                                                                                                      cooperation
                                                                                                                                                                            business                                       t
                                                                                                                                    Global
                                                                                                                                     trend
A changing professional capability                                                                                                 towards         Increase
                                                                                                                                                                                                A more complex world
                                                                                                                                                                   Growing
The tax profession is undergoing considerable change at all levels. The median demographic of a
                                                                                                                                 indirect tax          d           need for                    COMPLEXITY
                                                                                                                                                   mobility      international                 and a more sophisticated
tax practitioner is set to lower at the same time that globalised business, offshore advisory sourcing                                                            know-how                          administration
and digital innovation challenge existing approaches. The shifts in the tax profession in turn will
have an effect on the ATO, which relies on Australia’s intermediary population as a compliance
strategy.
                                                                                                                                       Growth of                   Offshoring
                                                                                                                                         online       New             work
Offshoring work                                                                                                                        education   models of                                                              en
There is currently a trend for tax practitioners to offshore low level routine tax processing work. Though this is an                              complianc                      A changing
effective cost reduction method, it creates uncertainties in the long term as new tax practitioners will lack the experience                                                                                               p
                                                                                                                                                       e                          professiona
of basic tax work. It also drives the declining entry into the profession as employer demand for graduates slows.                                  regulation
Increasingly, driven by costs and the multi-country nature of business, it is expected that Australia will also see                                                               l capability
offshoring of higher-order advisory services as well, particularly if other drivers such as generational change and
diminished entry make it difficult to source appropriate skills locally.                                                                                                                                           Economi
                                                                                                                                Broadening of                        Leakage of                   Diminished       uncertain
New models of compliance regulation                                                                                               advisory                           knowledge                       entry
                                                                                                                                 beyond tax                             and
There will likely be continuing and escalating expectations for Government agencies to reduce budgets, deliver                                                                    Generation
                                                                                                                                                       Tax           experience
efficiency dividends and further reduce regulatory burden. This will encourage regulators like ATO to explore and                                                                  change
                                                                                                                                                    workforce
ultimately implement new models to reduce barriers to compliance and reduce regulatory cost. For the tax profession,
                                                                                                                                                      model
this could see an increased use of trusted intermediary services to effectively outsource certain regulatory functions into                         innovation
the private sector, where this is a low risk proposition, stimulating the industry that services larger business segments. It
could also place new impetus on the use of data and technology make tax regulation more efficient, requiring the
industry to become competent at supporting changing reporting obligations and mitigate risk for their clients.

Leakage of knowledge and experience
A large cohort of older generation tax practitioners and government administrators will leave the workforce over the next
decade, taking with them knowledge that may not have been transferred adequately to the younger generation. This
includes in depth understanding of tax policies and historical rationales for certain practices. This has potential impacts
to the effectiveness and quality of some intermediary services and some administrative decision-making, if it is not dealt
with systemically.

Generational change
The tax industry is seeing and will continue to see a generational shift, with a significant amount of experienced
practitioners retiring or otherwise leaving the industry, and a new generation, with new sets of values, native digital
competency and new career expectations, entering. This will drive cultural and practice shifts in the industry, and also
significant more movement of people across organisations and also into and out of the tax profession as employees
become more “portable”.

Diminished entry
A reduced demand for tax advisory services in Australia will force tax practitioners to diversify their services beyond tax
verticals. Tax practices will hire less graduates for tax, feeding the issue of declining entry into the profession.
Additionally, tax is perceived as difficult work and a difficult career to advance in, and so may be less attractive to
prospective students than other areas of financial specialisation. This may cause a scarcity of available resources in
Australia and potentially see other financial disciplines widening to include (rather than specialise in) taxation to make
up the gap.
Everything is digital:
                                                                                                                                                                    Disruptive technology
                                                                                                                                             The next decade will be characterised by continuing
                                                                                                                                              innovation on conventional approaches as result of
                                                                                                                                             disruptive technology and the exponential growth of
                                                                                                                                               data, integration and technology-enabled business
                                                           Increased
                                                          surveillance
                                                                                                         Innovative
                                                                                                                                                                                         models
                                                                                                       approaches to
                                                                                                        compliance
                                                                                                                                                 New technologies are a catalyst and enabler for all other trends –
                                                                                                                                             including the viability of multi-country business, offshoring of tax work
                                                                                                                                                 and the empowering of Australian communities. They also carry a
                                                                                                                                                  potential positive effect from a cost-of-compliance perspective on
                                                                                                                                             both sides of the regulatory boundary. The availability of Big Data and
ply and                                    Big data
 and of                                                                                                  New                                       growing sophistication of analytics makes possible new levels of
                                                                            Business in the
ngibles                                                                         cloud
                                                                                                      methods of                             transparency and risk mining that Australia may choose to harness to
                                                                                                       avoiding
                                                                                                         tax
                                                                                                                                                    achieve its administrative outcomes more effectively and better
          Multi-national/
                                                                                                                                                                                       inform policy-making process.
          multi-company
                                                                                                                               Pre-filling
          supply chains

                                                                                      Increased
                                                                                   business and tax
                                                                                       software
                                                     Disruptive                      integration

ountry                                              technology
ness                                                                                                                   Low-burden
                                                                                                                          report
                                                                                                                        generation           Key questions
                                                                          Macro shift from                                                   • How can we harness technology to reduce our footprint on
                                                                         digital migrants to
                                                                           digital natives                                                     business, and what risks will we need to manage?
                  A more complex world

            COMPLEXITY                                                                                                                       • What capability will we need to run compliance in a rapidly
          and a more sophisticated administration
                                                                                                                                               evolving technology environment?
                                                                                                Changing
                                                                             Activist &        expectations                                  • How do we influence or integrate with the technology market to
                                                                            empowered                                                          support our strategic directions?
                                                                           communities

                                                      An                                  Shifting
                                                                                          political                Harnessing new
                                                    engaged
Disruptive technology

                                                                                                               Technology is disrupting current models of business and taxation. As our world becomes
                                                                                                               more connected, tasks more automated, data handling more sophisticated, business-to-
                                                                                                               business/government/consumer channels more diverse and software more integrated,
                                                                                                               flow on effects to every aspect of the business ecosystem will not simply continue but
                                                                                                               intensify. Both businesses and Government will be continuingly responding to new
                                                                                                               developments – both opportunities and challenges – that emerge from the accelerating
                                                                                                               pace of technological disruption.

                                                                                                               Big Data
                                                                                                               With increasing amounts and availability of information and the lowered cost of storage, the use of big data
                                                                                                               will become more prevalent both for and between businesses and the ATO. However, managing the vast
                                                                                                               amount of data, and creating actionable insight and meaning from it, is a complex process requiring
                                                                                                               investment and the development of new skill sets across the tax sphere.

                                                                                                               Business in the cloud
                                                                                                               Businesses are increasingly breaking the link between their physical location and services they offer and
                                                                                                               consume by exploiting the internet and other digital channels. Businesses outside Australia are transacting
                                                                                                               with Australia at every level of the economy without maintaining a presence here. This has implications for
                                                                                 Innovative                    taxation, and is a trend that is increasing and will continue to increase over time.
                                               Increased
                                              surveillance                      approaches
                                                                                     to                        New methods of avoiding tax
                                                                                compliance                     Rapid innovation and the availability of new technologies mean that some segments of the individual or
                                                                                                               corporate sector may develop new and unforseen ways of lower their tax bill at the fringes of or outside of
                                                                                                               the ATO’s compliance boundaries. Responses to these may need to be imaginative and novel, particularly
                                                                                                               given lead times for policy and treaty change.
 upply and                                                                       New
 emand of                                                                                                      Increased business and tax software integration
                                   Big data                  Business in       methods
ntangibles      Multi-                                                                                         The development of Government digital services and taxonomies, and the recognition of the value of data
                                                              the cloud           of
               national/                                                       avoiding                        supply chains within and across business, will stimulate business and tax software to better integrate with
                multi-                                                           tax                           other software, provide sophisticated analysis, and supply lower-overhead reporting as standard. This will
               company                                                                                         in turn have effects on the tax profession, and also increase the amount of data that the ATO could feasibly
                supply                                                                           Pre-filling   and usefully expect to receive.
                chains                                         Increased
                                                             business and                                      Macro shift from digital migrants to digital natives
ountry                                                       tax software                                      As generational change drives a shift in demographics, we will see a higher proportion of “digital natives”
                                                              integration                                      moving into decision making roles in both the tax administration and the tax profession.
ness                               Disruptive
                                  technology                                                 Low-
                                                                                           burden
                                                                                            report
                                                                                          generation
                                                         Macro shift
                                                         from digital
        A more complex world                             migrants to
                                                        digital natives
   COMPLEXITY
       and a more sophisticated
            administration                                                  Changing
                                                          Activist &
                                                         empowered         expectation
Disruptive
ountry                                             technology
 ess                                                                                                               Low-burden
                                                                                                                      report
                                                                                                                    generation

                                                                      Macro shift from
                                                                                                                                                The amplified conversation:
                                                                     digital migrants to
                                                                       digital natives                                                                An engaged public
                 A more complex world

           COMPLEXITY                                                                                                                 Public expectations on both the tax system and
         and a more sophisticated administration

                                                                                            Changing                                corporate contribution will continue to evolve, with
                                                                         Activist &        expectations
                                                                        empowered
                                                                                                                                      an engaged public voice becoming increasingly
                                                                       communities                                                enabled and amplified by new channels, information
                                                                                       Shifting
                                                                                                                                          sources and modes for formal and informal
                                                     An
                                                   engaged
                                                                                       political               Harnessing new                           community-driven campaigns.
nging                                                                                  priorities              channels and the
                                                                                                                media to drive
sional                                              public                                                       compliance       A public that is informed, values driven and willing to act now has the
                                                                                                                  behaviour
bility                                                                                                                                tools to be an effective force in shaping corporate and tax industry
                                                                     Tax vs goodwill                                                      culture. In the future, public awareness and its effect on market
                                                                      contribution                                                demand has the potential to slow revenue erosion. This is particularly
                                                                                                                                        the case when seen in the context of other strategic drivers (e.g.
                Diminished
                                              Economic                                           Build and                         transparency emerging from disruptive technology, and the notion of
                   entry
                                             uncertainty                                          support
                                                                                                public value
                                                                                                                                                      revenue fairness in multi-country business taxation).
ional                                                                                              of tax
ge

                                                             Focus shift to
                                                           ethics & corporate
                                                              governance

              Key questions

              • What values drive the public with respect to corporate tax compliance and
                fairness?

              • What strategies could the ATO consider to harness public perceptions and
                values to support a fair taxation outcome for Australia?
Disruptive
                                             technology
ntry
 s
                                                          Macro shift
           A more complex world
                                                          from digital
                                                          migrants to
     COMPLEXITY                                          digital natives                                     An engaged public
   and a more sophisticated administration
                                                                                                             The level of public participation promises to increase such that tax as an issue moves beyond
                                                              Activist &                                     one’s tax bill to influence consumer market behaviours, shape perception, and contribute
                                                              empowere         Changing
                                                                  d            expectatio                    social pressure to the compliance landscape.
                                                              communiti            ns
                                           An                     es                                         Activist and empowered public
                                                                         Shifting                            There is currently a surge of engagement and activism from the public about the perception of large business
                                         engaged                        political                            and high-wealth individuals not contributing fairly to Australia’s revenue, enabled by social media and a growth
anging                                    public                        priorities            Harnessing     of new news and opinion sources. This creates an less predictable policy and economic environment, and a
                                                                                             new channels
ssional                                                                                      and the media
                                                                                                             stronger opportunity for the public to participate influentially in the national conversation and as consumers, in
 bility                                                                                         to drive     the market.
                                                           Tax vs                             compliance
                                                                                               behaviour
                                                                                                             Shifting political priorities
                                                          goodwill
                                     Economic                                                                Both global and national trends, and the electoral cycle, will continue to drive frequent and unpredictable change
                                                        contribution
              Diminished            uncertainty                                                              in the business environment and the tax system. Policy outcomes delivered through significant tax instruments
                 entry                                                                                       such as the carbon price, mining tax, business tax incentives etc. will be created, redesigned or halted, causing
                                                                               Build and
                                                                                support
                                                                                                             periodic and potentially costly adjustments for tax regulators and intermediaries.
rational                                                                         public
ange                                                                          value of tax
                                                                                                             Economic uncertainty
                                                  Focus shift to                                             Although Australia performed strongly in the credit crisis, the changing face of Australian industry and the
                                                     ethics &                                                impacts of growth or decline in some influential industries, and the strong linkage of the health of the Australian
                                                    corporate                                                economy to regional and global trends will create ongoing uncertainty for businesses and consumers, in turn
                                                   governance                                                having an effect on revenue and tax compliance behaviours.

                                                                                                             Changing expectations
                                                                                                             There is currently a revival of the importance of ethics and corporate citizenship in discussions relating to tax. In
                                                                                                             part driven by public digital participation, and in part driven by global effort to manage imbalances and
                                                                                                             weaknesses in global taxation (e.g. the Base Erosion and Profit Shifting initiative), corporate citizenship
                                                                                                             including revenue contributions promises to be an increasingly common discussion point at the board table.

                                                                                                             Tax vs goodwill contribution
                                                                                                             Tax will continue to compete with other forms of contribution in the mind of the public. For example, business
                                                                                                             (particularly large business) will argue that the benefits they provide in terms of economic injection and goodwill
                                                                                                             contribution should be recognised by Government in the form of lower business taxation. Public opinion will be a
                                                                                                             key factor in the level of influence this point of view has on tax policy.
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