Daily Tax Report ®

How Millennials—and Gen Z—Will Transform Tax

Dec. 2, 2020, 8:01 AM

When I joined EY as an intern 35 years ago, the world was a very different place.

Paper documents, filing cabinets, and in-person meetings undercut organizational systems and procedures. Today, digital technologies underpin every aspect of the tax function and profession, ranging all the way from virtual team meetings stretching multiple time-zones, to real-time reporting of cross-border transactions. Indeed, the volume of digital data generated by organizations today sees more than half of 100 of the largest multinational companies spend between 40%-70% of their time on data cleansing alone, according to the latest EY Tax Technology and Transformation Survey.

While digital technologies have invariably provided an enormous opportunity for organizations and individuals—most recently seen in response to the Covid-19 pandemic—this has shifted not only what it means to be a tax professional, but what it means to be starting a career today—regardless of industry.

The Shifting Labor Market

For starters—the demography of the workplace is set to undergo a transformation in itself. The next decade will be shaped by the maturation of Gen Z—those aged between 10-24 years—and their entry into the workforce. Unlike their predecessors, they are the first generation to have lived their entire lives through the age of the Internet. As many developed economies see aging populations, this will have profound implications on everything from business strategy to engagement and organizational culture.

But while both millennials—those aged between 25-39 years—and Gen Z will soon constitute the largest share of the workforce, they are also entering into a very different job market. First, the Covid-19 pandemic has made starting a career not only more challenging due to the economic impact, but it has also shifted many on-boarding, operations and teaming protocols to increasingly digital platforms overnight—the rulebooks to which are still being written.

For those entering the workforce today, it’s simply no longer enough to have a firm grasp of tax technical knowledge, but an understanding of how this operates in tandem to a constantly changing digital ecosystem. More than 80% of organizations surveyed prior to the pandemic in the latest EY Tax and Finance Operate (TFO) Survey said their tax teams will be pivoting from a technical tax focus to an emphasis on data, process and tech skills over the next three years. Thirty-nine percent of respondents said they were already having trouble attracting and retaining people with the necessary skills to be effective in the modern tax and finance function.

Today, real-time reporting, cross-border information sharing, and increased transparency of business operations are now the norm. All the while, the technologies that govern businesses are constantly evolving.

The Digital Future

While such a rapidly developing professional market may bring heightened uncertainty and volatility, these developments are also incredibly exciting and represent an opportunity. Not just for organizations to reframe their future, but for individuals. Talent is becoming increasingly less restricted to geography, and entirely new industries are being born overnight.

In many respects, both the Gen Z and millennial demographics who are entering the workforce have been the greatest drivers of digital change. Their innovation, new ideas and “self-interest”—to borrow a phrase from political philosopher Adam Smith—has not only disrupted industries altogether, but given new voices to demographics less represented historically in national and international conversations.

The Impact on Tax

What does all this ultimately mean for somebody starting their career in the financial services sector?

Ultimately, it means the focus of tax policy has shifted. Whereas tax policy has always played an important role in everything from funding public services to incentivizing public and organizational behavior, the increasing digitalization of the global economy has seen greater focus by the OECD through its BEPS (Base Erosion and Profit Shifting) 2.0 project to address the impact this will have on taxation, particularly when organizations and individuals operate in markets with limited physical presence.

For the tax profession, this also means the daily duties of professionals are shifting. By 2025, it is estimated that 80% of typical finance functions will be automated, consolidated, or procured through a managed-services provider, potentially freeing talent to pursue higher-value tasks. Only 3% of tax functions are making extensive use of such disruptive technologies—with 15% not using them at all—according to the TFO Survey.

The picture this paints of the tax profession is one that is far nimbler and more dynamic.

As we celebrate 10 years of the EY Young Tax Professional of the Year program, I would say this to the 32 finalists represented around the world: while digital literacy and tax technical knowledge are vital—alone they are not predicators of success. Grit, resilience—and a capacity to be human and team with others—are also as vital as ever. If the pandemic has taught us anything, it’s just how important real, human contact and connection is to our health and success.

Looking ahead, the long-term impact of Covid-19 is still yet to be determined, but if anything is certain, it’s that digital capabilities will become even more vital to the tax function and profession of the future.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Kate Barton is EY Global Vice Chair—Tax

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.

For all media inquiries, please contact:dan.barabas@uk.ey.com

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