As part of our series of articles exploring the developments most likely to shape technical areas of the profession over the next decade, we look at trends affecting tax professionals
This article was first published in the October 2016 international edition of Accounting and Business magazine.
Tax professionals play a vital role as advisers – to clients, tax authorities and other stakeholders – and as intermediaries between taxpayers and tax authorities.
Since the global financial crisis of 2007–08, the increased profile of tax and the intensified focus on transparency have heightened interest in the activities of tax specialists.
Governments are finding it more difficult to devise, impose and collect taxes due to a range of challenging conditions. They face stagnant economies, the dominance of multinationals in the global economy, growing electronic trade, more mobile and sophisticated taxpayers and competition with other national tax systems. At the same time political and public debate on the social acceptability of tax planning – and where to draw the line between this and ‘aggressive’ tax avoidance – have created ethical, technical and practical challenges for taxpayers and their advisers.
Responding to change
Over the next five years, tax advice, compliance, reporting, planning and risk management will become even more complex, according to ACCA’s research report, Professional accountants – the future. ACCA members participating in workshops around the world expect national and international tax conventions, laws and regulations to become more intricate. Individuals working as tax specialists will need strong general tax knowledge, but there is also likely to be increased demand for specialists capable of tackling niche issues linked to particular sectors or types of transaction.
Professional accountants specialising in tax will need to see the global picture, keeping up with information-sharing initiatives such as the US Foreign Account Tax Compliance Act (FATCA) and intergovernmental tax action such as the project to limit base erosion and profit shifting. Governments around the world are likely to try to raise more revenue from indirect taxes and some jurisdictions, such as China and Singapore, may abolish direct personal and corporate taxation altogether by 2025.
Such developments will require tax professionals to develop a different approach to tax management. Business leaders increasingly expect professional accountants to partner with the business and understand business challenges, rather than focusing on the numbers. The same applies to tax specialists. According to the research, tax professionals in both business and practice expect to move beyond their traditional roles as technicians focused on compliance and the past.
They will therefore need a deeper understanding of the organisations with which they work and of the broader business environment in which they operate. Tax professionals will be required to take a more risk-orientated view of business and to collaborate in the design and running of risk-management structures and controls.
The use of tax software and further automation of basic processes will continue to shape the work of tax professionals, further removing mundane activities from their daily tasks.
Widespread access to ‘big data’ will also have an impact. A decade from now, ACCA workshop participants expect that the software tools used by taxpayers and tax professionals will be significantly smarter – creating both opportunities and challenges. They will enable more detailed analysis, but also potentially enable non-tax professionals to conduct that analysis themselves.
Planning for action
Based on the views of ACCA workshop participants, the need for a more global tax perspective tops the list of key competencies that tax professionals will need to develop over the next five to 10 years. This reflects the many global trends in tax identified above. Aligned with this global perspective, tax professionals will need sound knowledge of local and international tax laws and regulations, as well as strong general technical tax expertise. Some will need to specialise in certain subject areas, such as corporate tax, indirect tax or group transactions.
Tax knowledge won’t be enough, of course. Workshop participants expect tax professionals to need business awareness – a holistic view of the business, including an ability to interact well with other business functions and to think and plan commercially and strategically. Similarly, as with many other professional accountancy roles, tax specialists will need to be competent in risk assessment and management. They will need to understand the tax-related risks of corporate structures, positions taken, existing and emerging regulations and shifting public expectations.
Communication skills will be vital for tax professionals to help them manage relationships (with clients, tax authorities and internal business departments) and explain tax matters to non-technical stakeholders, including boards, management, investors, clients and the media. Similarly they will need competency in advocacy and negotiation to support their work in dispute resolution and problem solving.
Professional ethics are also expected to be increasingly important over the next five to 10 years. Tax professionals will need to think and behave ethically, with integrity and objectivity, showing appropriate due care. In addition, all tax professionals will need IT knowledge and capability, using specialist tax software for computations and analysis as well as tax administrations’ electronic platforms. They will also need to be able to take advantage of digital technology and developments in cloud-based and mobile solutions.
Looking ahead over the next five to 10 years, ACCA workshop participants identify the need for extra skills in addition to the top 10. Tax professionals will increasingly be expected to show competency in areas such as the management of resources (people, projects, time, tasks and budgets), the movement of goods and services (customs, and import and export taxes), the interaction between direct and indirect taxes, workforce mobility and group transactions.
‘It’s important that the people in tax are not just pure tax experts. It’s important to understand the business as well.’
Harry Charalambos Antoniou FCCA, global head of tax accounting and financial reporting, Zurich Insurance
‘By 2020, specialisation in tax won’t be enough. The professional of the future will need a background in law, business, sales or IT.’
Roman Ženatý, director, tax and legal department, Deloitte, Czech Republic
‘Accountants need better analytical skills and a better understanding of how to apply technologies such as big data and the cloud.’
Ian Baldwin FCCA, indirect tax manager, IBM UK
‘The role of tax translation may gradually disappear in the time of big data.’
Julia Li, VP taxation, Citigroup China
‘Base erosion and profit shifting is going to turn the tax world upside down over the next decade.’
David Sandison, MD, David Sandison & Co, Singapore
Top 10 competencies in tax
- Global tax perspective
- Business attitude and awareness
- Technical tax expertise
- Risk assessment and management
- Professional ethics
- IT knowledge
- Advocacy and negotiation
- Laws and regulations