Global tax reboot

As chief tax officers manage complexity and change in tax, it’s important to take in the big picture. Geopolitical events and social trends underway today have the potential to drive the tax policy decisions of governments and the business strategies of global companies into the future. Chief tax officers should understand these developments so they can anticipate — and even influence — the potential effects on the business.

To help businesses navigate these choppy waters, tax leaders should understand how geopolitical trends might play out, what threats might arise and how exposure can be mitigated. Many companies are taking steps to manage their exposure by scenario planning — considering what’s likely, what alternatives are credible, what’s unlikely and what’s worst case — so they can chart their best course forward. Tax leaders have an important part in these endeavors to shed light on the tax angles of the strategic decisions being made.

Trend 1

After decades of ongoing globalization, the international order is splintering and governments are now prioritizing safety and security over measures to promote prosperity and growth.

Trend 2

International tax is a rare area where multilateral collaboration continues, with consensus being forged over fairer, more efficient tax rules. The consensus is fragile, however, and significant divisions over some of the rules still need to be bridged.

Trend 3

Income inequality is worsening globally, leading to distrust of politicians and government, and fueling populist and protectionist attitudes.

The key is to shift people's mindsets toward seeing scenario planning and strategic planning not as discrete activities but as one and the same. A geopolitical risk governance framework can help businesses produce an evergreen roadmap for achieving their goals across a range of possible futures.

David Linke

Global Head of Tax & Legal Services, KPMG International

Keep up with geopolitical forces and trends

These developments will have implications for tax policy and being up to speed can help put chief tax officers in the best position to steer their organization’s response.
Seek to build and work connections like never before

This includes: professional peers, advisers, academics and non governmental organizations to engage on emerging issues, social currents and political trends; tax authorities and policy makers to take part in tax policy debates make sure business issues are heard; and the C-suite and senior management across the company to explain the sources of tax risk and highlight opportunities.
Consider a risk governance framework

This may optimize opportunities to contribute to business strategy, build team’s profile, and contribute to business’s sustainability and success.

It is important that people treat scenario and strategic planning as one cohesive initiative rather than two distinct activities. Bringing about that shift and incorporating a geopolitical risk governance framework can support businesses put together a perennial plan of action that will help them meet their goals in a host of potential future scenarios.

Zubair Patel

Head of Tax Steering group in KPMG Middle East, South Asia, Caucasus and Central Asia (MESAC) region and Head of Tax & Corporate services, KPMG in Kuwait