1. What is the most significant change to your region/jurisdiction’s tax legislation or regulations in the past 12 months?
While not specific to the US, OECD pillar two represents one of the biggest shifts in global taxation in decades and brings a whole new challenge for tax – not only for data and income tax reporting but also for organisations’ operations to strategies for mergers and acquisitions, and even supply chain management. Understanding these changes is crucial for strategic growth and compliance.
2. What has been the most significant impact of that change?
Our clients have been planning to be ready to report on pillar two for their first-quarter financial statements in 2024, and some even had to address disclosure requirements for their year-end 2023 financial statements. It’s complex to implement, and financial reporting is the first order of business. Pillar two requires multinational enterprises to potentially provide more than 100 separate data points for each entity in an organisation. We’re helping our clients get ready for this reporting by advising them as they work through both the technical and technology challenges these rules present. Varying start dates in different countries will likely add to the complexity in the early years, as a result of the interconnectedness of the rules.
3. How do you anticipate that change impacting your work and the market moving forwards?
Understanding and adapting to these changes is key not only to staying compliant but also to seizing new opportunities that come with these regulatory shifts. Additionally, with country-by-country reporting, tax regulators around the world will have access to more information and increased transparency to a company’s data. We will continue to help our clients as they manage the data and the way they are reporting.
4. How has this changed the way you offer tax advice?
Pillar two is reshaping core business strategies, often necessitating a new approach to data management, reporting processes, technology, and fundamental strategic planning. With many countries adopting OECD pillar two, we expect there will continue to be a greater need for support around meeting pillar two’s complex reporting mandates in a timely manner.
5. What potential other legislative/regulatory changes are on the horizon that you think will have a big impact on your region/jurisdiction?
Given the upcoming elections, we don’t expect to see significant new tax legislation this year.
6. How are issues surrounding the taxation of the digital economy affecting your work?
Taxation of the digital economy is complex and continues to evolve. The digital economy’s borderless nature poses challenges in determining tax jurisdictions. This will be an ongoing global conversation.
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