The Defining, or Not So Defining Trends That Impacted the Tax Market in 2019...
At the start of the year, the tax team in Barden Accounting & Tax attempted to predict some trends likely to impact the tax market in Ireland throughout 2019 (see here). Hard to believe that 2019 is drawing to a close with only 5 working weeks left to Christmas!
We thought it would be useful to look back and see what really did happen during the year, and if the predicted trends had their defining moments. In the coming few weeks we will examine each predicted trend closely and see what impact it had, or didn’t, and may have on the employment market for tax professionals.
The first prediction we had was that in 2019 more changes are to come…..
2019 – More Changes to Come
This absolutely was the case in 2019. Of course tax and tax rules are constantly changing (hence an excellent career choice for many) but this year marked significant change by way of policy changes particularly in relation to international corporate tax regimes. This will have a huge impact on Ireland and has been described as “international tax turbulence”.
It Began in 2013…BEPS
It began in 2013 with the OECD’s Base Erosion and Profit Sharing (BEPS) action plan – a regime to ensure other countries get a “fair” piece of the pie for corporate tax receipts.
It came at a time when there was a spotlight on corporate’s affairs and the amount of tax large corporates were paying during a really tough period of austerity. As a result, BEPS was the talking point amongst many countries at OECD level and the drive for change intensified.
The end of tax havens and the “double Irish” along with increased compliance and transparency all occurred during this period. A positive outcome for Ireland, as we always followed the rules, and this reaffirmed our good tax policies. We have a low rate but wide base. In fact, companies located here ended up paying more tax in Ireland, not less.
The way companies are doing business has changed as a result of digitalisation. Companies can move their supply chain around and sell into major markets without having a substantial (or any) presence in that country. At the moment companies are taxed based on the location where functions are performed, assets used and risks assumed (hence Ireland is in a favourable position). This has led to a situation where countries are saying companies are exploiting their market without paying enough or any tax and they want a bigger slice.
A Fair Share of the Global Tax Pie?
Suddenly it’s not about companies paying their fair share of taxes, it’s about countries getting what they think should be the fair share of the global tax pie. As a result they are now embarking upon the most fundamental revision of the basis of tax in almost a century!
And so was born BEPS 2.0. A minimum tax on corporations regardless of where it’s located is one change within BEPS 2.0. It’s clear that it’s a politically driven process now and perhaps which country shouts the loudest will come out on top, who knows?
The OECD has said it wants these new tax rules to be implemented by 2020 but in reality will take at least 4 years. Regardless, it’s a very tight time frame for companies to make sense of these changes.
So what does all this mean for tax professionals in Ireland?
The good news is that tax professionals with a corporate and international tax background will be in huge demand.
The requirement for expert advice in this highly complex area of international taxes has led to an increased workload within the firms. However, some firms are planning ahead and whilst workloads are being balanced at the moment, they can anticipate an increase in queries from their clients over the coming few years and are planning accordingly.
Transfer pricing, indirect tax and global mobility experts will also be required but we will see a more collaborative and “one stop shop” approach by firms, led by their corporate tax teams.
In-house tax functions will also be impacted by these changes and many companies which did not have a dedicated tax resource changed their strategy around this during 2019 and sought to recruit an international/corporate tax expert – typically at senior manager/director level.
Good news again for tax professionals looking to move in-house. Furthermore as supply chains will need to be reviewed more closely, there has been an increase in the recruitment of tax accountants and tax compliance specialists/managers to manage the compliance matters of these groups.
Interesting times ahead for sure!
Watch out for our next blog…
In the coming few weeks we will examine each predicted trend closely and see what impact it had, or didn’t, and may have on the employment market for tax professionals. To view the original blog predicting some trends likely to impact the tax market in Ireland in 2019 see here.
Need help planning your professional future?
If you are a tax professional looking for a new opportunity or wishing to build your professional team get in touch with our specialist and experienced tax career advisors here at Barden – Kate Flanagan (Tax Partner, Dublin) and Aideen Murphy (Tax Partner, Cork).
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