While 90% of CFOs and tax leaders expect a “significant” or “moderate” impact from BEPS 2.0, only 30% have completed an impact assessment, said EY recently when releasing results of its EY Tax and Finance Operations Survey.
The survey, polled 1,600 CFOs, heads of tax and finance professionals across 32 jurisdictions, according to EY.
Regulatory readiness deepens challenges
Many large global businesses are bracing for sweeping reforms as governments implement the Organisation for Economic Co-operation and Development’s (OECD)/G20 base erosion and profit shifting (BEPS) 2.0 rules including global minimum taxes under Pillar Two, said EY.
Beyond BEPS 2.0, a range of other compliance complexities are putting pressure on tax and finance functions, EY noted, adding that these include the US corporate alternative minimum tax, green and sustainability taxes, the EU’s Carbon Border Adjustment Mechanism and an accelerating pace of countries converting to e-invoicing.
In addition, businesses face a sharp uptick in formal and informal requests for tax and finance information from authorities, the firm observed.
“We are in the middle of an unprecedented overhaul of a century old ‘global tax code’ driven by many factors, including digital, the economy, geo-politics, a movement to green and clean, and much more,” said Marna Ricker, EY Global Vice Chair – Tax. “Tax leaders who consider transforming their tax and finance functions by leveraging data and the latest technologies will probably have an easier time complying with changing laws and regulations while their tax and finance functions may be better positioned to provide more strategic value to their organisations.”
- Businesses want their tax and finance functions to provide high-value strategic counsel on the business’s overall direction and to do so quickly and efficiently.
- However, 48% of respondents cite the lack of a sustainable plan for data and technology is the biggest barrier to achieving this vision.
- Tax and finance leaders are also skeptical that emerging technologies like generative artificial intelligence (AI) will have an impact on their work, with 85% saying they do not believe generative AI tools will help drive increased effectiveness and efficiencies within their tax function.
- 51% of tax leaders say they have moderate to significant struggles with motivating talent and avoiding burnout within the teams.
- Meanwhile, 63% say their employees will need to augment their tax technical skills with new data, processes and technology abilities in the next three years.
- 29% say they do not have enough highly skilled professionals capable of monitoring, evaluating and implementing tax legislative and regulatory change around the world.
- Respondents that co-source 25% or less of their workload are more likely to report that they are struggling with these issues than those that co-source higher concentrations.