What was the most significant development in your region/jurisdiction's tax practice in the past 18 months?
A convergence of three key events have transformed Asia Pacific:
- Rise of the AP domestic consumer
- Shifting of trade routes due to geopolitics and diverging economic growths
What was the most notable effect of that change?
The most notable affect is the adoption of "change is the new norm" mind-set. All of these things have forced people to embrace change, seek flexibility and agility, and look for continuous improvement and growth. With respect to tax, this has resulted in taxpayers and advisors needing nimbleness, flexibility and quick reflexes as tax authorities quickly change long standing policies.
Where is the market moving in this practice area?
The market is adopting technology as one of the solutions to be flexible and quick. Technology allows for mobility and quick scalability as the business grows or is modified. In light of COVID 19 it also resulted in less disruption to the tax function.
What kind of impact will this have on your work?
This is impacting our work by accelerating our adoption of technology. It is becoming more of a necessity to address our constantly changing clients' needs.
Do you anticipate any significant legislative changes in the future with a material impact on tax in your region?
BEPS will have an impact as it will shift taxes amongst countries. This will both necessitate the change of business structures and approaches as well as tax legislation as countries need to maintain their tax base. We also anticipate a growth in consumer-based taxes (digital levy taxes, pillar 1, indirect taxes) which will also challenge some of the fundamental long-standing taxation policies.
If these come into force, how will the industry look in the future?
There will be an increase in transactional based taxes vs profit-based taxes. This will result in a change in tax advisor capabilities and technology tools to address this.
How would you describe the tax controversy landscape in your region/jurisdiction?
In development. Across the region there is varying degrees of capabilities by tax authorities, adherence to rules of law/due process, clarity in procedures, and relationships with taxpayers. All have the objective to address these issues but are doing so at a different pace.
Do you expect tax procedures in your region to move towards common standards or diverge in the future?
The acceptance of OECD policies (MLI, OECD Treaty, BEPS) is becoming more widely accepted in AP and as such there is tolerance for common standards. There is very regular sharing amongst tax authorities on policies and procedures as they all work to gain efficiencies.
However, more common standards does not mean less disputes as the standards will always have local interpretation and localization amendments.
Is the global drive towards regulation going to affect tax practice? If yes, in which areas?
Regulation will result in more reporting. Additional reporting also results in more auditing and disputes. As a result, our tax practice will grow more round data management for reporting needs and tax controversy to deal with the upcoming audits and disputes.
What do you see as direct impact of COVID-19 in your practice?
COVID-19 will result in an initial slowdown of our business overall followed by a recovery as we assist our client get back to normal as soon as possible.
We also expect there will be business model changes as companies restructure to address demand changes as well as supply chain changes. These will all necessitate tax changes.
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