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Tax is changing. We’re changing tax.

Tax today is attracting attention like never before: among governments and citizens, in boardrooms and the C-suite—across businesses and their supply chains. Tax is at the forefront of negotiation and debate, and it is driving decisions on policy, trade, strategy and business transformation. At the same time, the world around us has changed dramatically in terms of geopolitical shifts, technological innovation, globalization, new business and consumer demands, and new ways of living, and the emergence of previously unseen types of businesses.

It might seem like tax stormed the world overnight. But the changes we see now stem from an accumulation of forces and factors reaching back decades.

In the past 20 years, as globalization has taken hold and technology has flourished, corporate income taxes have diminished in importance while indirect taxes have become a bigger part of the tax revenue mix. Digitization has allowed governments to focus more on collecting taxes at the level of individual transactions, and tax compliance has pervaded processes across businesses and intensified financial risk.

Meanwhile, reputational risk around tax has reached new heights as governments and the general public have taken more interest in large corporations and how much tax they pay. The global effort to curb tax base erosion and profit shifting has concentrated attention on both tax competition among countries and tax responsibility among corporations. This international work has also encouraged more cooperation among tax authorities, along with more inclusiveness and collaboration on tax between developed and emerging economies.

Changes are equally profound within international businesses. Globalization and technology have enabled new ways of doing business, and tax has become enmeshed with all aspects of business transformation. And as businesses transform, their tax functions are beginning to evolve into sources of significant strategic value.

If you find it hard to fathom the depths of interconnection between tax and the worlds of politics, society and business, you’re not alone.

It can be helpful to think about these interconnections in view of four overarching trends –trends that overlap with each other but that all have chief tax officers and tax leaders at their very center.

Shifting geopolitical currents:
From Brexit to tightening immigration to tariff wars, modern times are seeing the erosion of multilateral institutions and agreements amid rising nationalism and protectionism. Uncertainty reigns as tax policies shift accordingly. With a growing vacancy in leadership at the global level, China in particular seems set to gain new prominence on the world stage.
Digitizing tax data and processes: Tax authorities are investing in technology to improve how they assess risk and boost collections. Tax functions are investing in technology to enhance automation, improve the accuracy and visibility of their tax data and unlock its strategic value. Digitization is allowing governments to direct policy toward economic activity at the level of distinct transactions and to consider new forms of taxation of activity in the digital domain. Advancing technology is disrupting tax on each of these fronts, with all of them leading toward more extensive, real-time analysis of ever more tax data.
Evolving business models: The past two decades have seen fundamental shifts in all aspects of international businesses: from how they invest, through how they make money, to how they distribute profits and deploy capital. These changes have been requiring companies to continually change their tax strategies, which is increasingly tough as the international tax system itself has come under strain.
Reimagining tax functions: All of the above are putting pressure on chief tax officers to question their tax operating models and find new ways to structure their people, processes and technology to meet the demands of the future.

As the world of tax transforms, chief tax officers themselves are changing. Where the job used to require knowledge of both the law and accounting, tomorrow’s chief tax officers will need to add new skills to the mix. Understanding tax technology and data analytics will be critical for both compliance and strategic decision making. Understanding communications will be critical for managing and mitigating reputational risk. And understanding the business will be critical for ensuring the tax function adds its full potential value. No one can predict the future, but one thing is certain: tax will continue to change, and it will continue to change all of us who work in this profession, and all of the societies it serves.