All information and credit for this blog post goes to Ernst & Young and their blog post located here.
In the ever-evolving landscape of finance, businesses are facing a looming challenge — a wave of incoming changes to the indirect tax space. As governments around the world seek to replenish depleted revenue and address economic uncertainties exacerbated by recent global events, tax authorities are gearing up to scrutinize financial records more heavily. This shift in focus is poised to affect businesses across all industries and stages of growth, requiring a proactive approach to navigating the potential storm.
The most noticeable change will be a focus by governments on ways to increase tax revenue from an increase in taxation to increased financial audits. Governments have injected massive funds into economic recovery efforts, resulting in unprecedented levels of public debt. In order to reclaim some of that lost revenue, tax authorities are expected to expend more efforts in reviewing businesses’ tax returns and financial transactions. This attempt to recoup lost tax revenue will be an ongoing effort by governments in the coming years and it’s one that looks to only increase in scope.
The next change will be around trade, while indirect taxes and trade are intrinsically linked, the impact of increased trade disputes, new trade agreements and alliances will all shift the way trade is taxed. The role of trade and its effect on business has always existed but the attention trade has garnered with recent global events makes its impact more glaring for businesses of all sizes. Companies are adapting how they do business in response to these trade and supply chain issues which will continue to have a noticeable effect on the level of taxation across all sectors of the economy. The reverse is also true where the taxes themselves may in turn impact supply chains.
The last change is the transformation of the technological landscape which gives both governments and businesses up to date and more efficient ways to manage oversight into financial operations. These shifts in technology mean businesses will have to be more aware and cognizant of their finances data and operations. Emerging technology will broaden the scope of regulatory oversight into how business manage tax and financial operations but will also open doors for companies looking to improve their data management and tax operations. The balance between efficient financial operations and data management will be stronger than ever and companies will be able to utilize a wide array of tools to prepare for these coming changes.
In conclusion, the anticipated shifts in indirect tax will come from increased oversight, trade shifts, and advancing financial and data management technologies. Preparing for these changes is crucial for businesses to navigate the coming regulatory and technological shifts. Embracing proactive measures, staying informed about evolving tax regulations, leveraging emerging technologies, and seeking professional guidance are essential strategies to weather the storm and avoid unforeseen issues.
If you would like to learn more about how CereTax can help your business have the technology needed to prepare for what lies ahead, connect with us here.
