Rapid Shifts in Technology, Policies Unite Tax Pros Worldwide

It’s not easy to foreshadow the future of the tax profession. Professionally speaking, taxation spans the lives of officials, policymakers, academics, in-house specialists, practitioners, and judges.

What binds these groups together—along with tax lawyers, accountants, and economists—are the challenges and opportunities that arise and how those will shape the tax sector in coming years.

Tech Tools

Use of technology in the tax arena is progressing quickly, presenting both a threat and a useful tool.

Tax jurisdictions such as Colombia and South Korea efficiently use chatbots to address routine compliance questions. And technology enables taxpayers of all types to prepare and file their income tax returns without input from an accountant.

In the near future, we can expect more tax administrations will deploy AI to issue opinions, undertake audit actions, and even perform assessments. This is already happening in some highly digitalized jurisdictions. As AI tools become more integrated, taxpayers and the industry around them need to adjust to the experience of interacting with machines.

This reality poses new challenges for seasoned professionals and the next generation. For example, what questions should a judge ask when the analysis behind an act of authority didn’t come from a tax inspector, but from software?

Understanding the frameworks behind those tools is key, as they establish new parameters around interactions that taxpayers might expect to have with a tax administration. Tech adoption also raises the question whether today’s law students and early-career professionals should now be trained to prove a point to emotionless, non-human code.

New Global Framework

In the past, international tax was mainly restricted to the study treaties that arose from bilateral negotiations between states. As a result, just a small number of international tax experts had pivotal discussions on taxing rights and other topics.

International tax has evolved with the advent of Pillars One and Two under BEPS 2.0—to a stage where a group of states can coerce a “sovereign” country to change its internal tax policy on penalty of rendering it useless. Therefore, taxation no longer exclusively derives from being sovereign, and thus national limits are as diffuse as ever.

What should matter for tax professionals from a policy perspective is no longer what the ultimate legislative authority in a given country thinks about its own tax policy. Instead, tax professionals must consider whether specific trends in international taxation are compatible with the internal rules of their own jurisdiction.

It’s perhaps futile now to speak in terms of federal, national, or international tax experts, considering everything is intertwined.

Pillar Two is the best current example of this interconnection. In the past, it was inconceivable that a group of countries’ refusal to compete would neutralize tax competition by appropriating tax revenue from jurisdictions that deeply need more foreign investment, while at the same time extracting tax revenue from superpowers. Without even firing a shot, that is impressive.

How will professionals advise their high-net-worth clients in the future with a looming threat of a global minimum tax on wealthy individuals? Internal rules assessment within nations will no longer suffice. The boundaries of what’s possible and what isn’t aren’t so clear anymore.

Civil Society

Long gone are days when taxes were only a subject of conversation between highly technical professionals and politicians trying to shape the budgetary needs of their programs.

The tax debate is now up for grabs, as social media brings discussions mainstream, and civil organizations such as the Tax Justice Network, Tax Foundation, Oxfam, or the Asian People’s Movement on Debt and Development translate dry technical concepts for public consumption—through tax rankings, reports on taxes and human rights, or grass-roots actions on specific issues.

Social media and other digital content encourages wider scrutiny from civil society and debate about tax policy, legal cases, and even behavior of judges and advisers.

As practitioners continue to prioritize managing tax risks, they also must ensure that the reputational risk of their clients, products, or even their own practice doesn’t spiral out of control. If social media and the era of cancel culture have taught us anything, it’s that the wrong kind of digital exposure will have long-lasting effects.

Firms must consider whether they have prepared their teams, particularly at an entry or middle level, to carefully monitor how their tax work impacts their firms’ reputations and, consequently, their sustainability over time.

Public sanctions against advisers present hard lessons for market-wide reconsideration of tax practices and an increasing need for better transparency and communication between tax professionals and society.

Outlook

For those who can adapt and embrace those soft skills we hear so much about, the future is bright. While many factors remain a constant for tax jobs, such as a deep understanding of regulation, the set of skills and awareness required for the tax professionals of today and the future is changing.

If technology takes over tax compliance, tax professionals will need to do a little more legwork to figure out where they fit in.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Ignacio Gepp is partner with Puente Sur in Chile.

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