The new Thomson Reuters podcast, Tax & Tech Talks explores the evolving intersection of tax and technology. Each episode explores current issues or topics, giving listeners an opportunity to gain a deeper understanding and new perspectives in tax and tech. We chat with top subject matter experts and industry leaders as we break down these top-of-mind topics.
In this episode “Do more with More? Dissecting The Fast Pace Of Digital Transformation And It’s Tax Implications,” host Adam Shaffner, Director of Indirect Tax Propositions at Thomson Reuters, and his guests Melissa Oaks and Bianca Kuijper discuss three areas digital transformations are occurring simultaneously and explore how they are impacting tax. They converse on how transformations in the market, in governments, and inside of organizations are pushing tax departments to transform, leverage more technology, and become more digital.
The Digital Marketplace Transformation is Impacting Every Area of Taxation
Even before Covid-19 companies were offering more digital products like ridesharing apps, digital skins on games like Fortnite, and with the movement from in-person services to virtual services more companies find themselves struggling to figure out what is taxable under a framework that was developed seventy years ago. Melissa Oaks, current awareness lead for Thomson Reuters Checkpoint, explains, “it’s not just putting out new products and new services, then we have to figure out how to tax them.” While some states have kept up a lot of states are slow to evolve their sales tax rules. She goes on to explain that in a Post-Wayfair world many states are exploring new marketplace facilitator laws that impact large platforms that were previously only responsible for their own taxes, now they find themselves obligated to collect and remit third-party sales which increase complexity.
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Do More with More? Dissecting the Fast Pace of Digital Transformation and Its Tax Implications
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Bianca Kuijper, Director of Tax and Transfer Pricing Director at Thomson Reuters offers insight from a direct tax perspective that has historically been focused on physical presence but in a digital world, there is no physical presence, so governments are challenged with how to tax multi-nationals. Their response is the soon to be finalized BEPs 2.0 which is focused on how to tax the digital economy and create more transparency. She remarks that it’s becoming increasingly complicated and tax departments are being forced to become digital. There is simply no way to keep up with the increasing demands, track the law changes, and ensure consistent reporting across all these different countries without technology.
The Speed of Change in Governments has become Unpresented
Not only are companies offering new products and services, but governments are also becoming more technologically advanced in their compliance as well, asking for more data, requiring pre-clearance and e-invoices and once one jurisdiction does it, others jump on the bandwagon, creating what Adam calls “a domino effect.” Governments are strapped for revenue and on the line for increased jobless benefits and other COVID-19 obligations so they are investing in technology and breaking down internal silos to ensure they are can meet their obligations.
Additionally, Melissa remarks, “we’re seeing that laws seem to be coming about in a quicker manner,” She observes that something like the Tax Cuts and Jobs Act was proposed, negotiated, passed, and implemented very quickly. She says, “That’s not something that we have seen with previous tax bills.”
Will Automation Replace the Tax Professional?
Most tax professionals who have spent decades-long in the business are worried about how technology and tax automation might eventually replace them. The short answer to this question, according to Adam, Melissa and Bianca is a resounding ‘no.’ Melissa believes the “tax department is going to be in even higher demand” in the future.
About our experts:
Melissa Oaks is the current awareness lead for Thomson Reuters Checkpoint where she is responsible for putting out a significant amount of the daily news for our Checkpoint subscribers. Her specialties include tax policy, complex nexus, and apportionment issues. She shares how she got a front-row seat to the Wayfair hearing and offers valuable insights for organizations struggling to keep up with the constant changes tax professionals are faced with.
Bianca Kuijper is Director of Direct Tax and Transfer Pricing at Thomson Reuters and had previously spent time focused on international tax planning at Ernst & Young in the Netherlands before joining Thomson Reuters nine years ago. She shares anecdotes from her personal journey in transforming from researching manually to digitally and what to expect from BEPs 2.0.
For more articles to help you transform your tax department, read our latest blog posts:
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