Jurisdictions worldwide are creating faster and more efficient accounting and tax laws and systems to attract multinational business – but who is doing what, how and at what speed?
TMF Group's Global Business Complexity Index Accounting and Tax Report 2019 – featuring research that spans 76 jurisdictions – outlines the trends affecting accounting and tax regulations and processes and how they are playing out on the ground in key territories.
1. Digitisation
Technology is improving efficiency and transparency. Digital channels for accounting and tax filing, data matching and auditing is on the rise around the globe. However, paper-based transactions remain common in many jurisdictions.
2. Harmonisation
Most jurisdictions have aligned with international standards and practices, including country-by-country reporting and transfer pricing rules. Local GAAP (Generally Accepted Accounting Principles) is still more prevalent than IFRS (International Financial Reporting Standards).
3. Changing relationships between authorities and businesses
Tax authorities are adjusting the rules governing business operations in a bid to create business-friendly environments. While audits are compulsory for all businesses in only 17% of jurisdictions, most jurisdictions enforce strict penalties for companies that do not comply with tax regulations.
4. Evolving tax policy
Many jurisdictions are adjusting taxation to raise additional revenue, 'nudge' societal behaviours and create alignment with international norms. For example, Qatar and Bahrain are in the process of joining the 167 jurisdictions that apply VAT to purchases. Elsewhere, new taxes designed to tackle social and environmental problems are becoming widespread.
How to keep up
International accounting and tax principles are increasingly standardising but it won't be a smooth ride for multinationals. The way supranational regulation lands on the ground differs in scope and interpretation and local regulatory requirements complicate the picture further. The optimal solution is to work with an accounting and tax partner that can provide both the consistency of global frameworks and localised expertise.
The Global Business Complexity Index Accounting and Tax Report 2019 analyses research conducted among TMF Group's accounting and tax specialists in 76 jurisdictions. Download it here.
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