What happens when the taxman gets superpowers?

Digitalisation meets tax authority: in a new white paper we explain why the corporate world should be preparing now for the imminent digitalisation of tax authorities.

The state is digitally savvier than you think

Digital technologies are giving the public authorities unparalleled scope for action, especially when it comes to monitoring and enforcing compliance with the law. The resulting massively tighter control will be possible at negligible cost – what we call the Zero Cost of Control phenomenon.
 

The new world of tax

We’re already observing the first indications of this sea change in the area of tax. Taxmen in multiple countries are currently embarking on massive new investment projects. The impact on the corporate world will be disruptive. The increasing amount of information available for processing means that we’re moving towards an age of transparency with sophisticated analytics techniques and real-time access to business data.

 

Act now before the tax hits the fan

This trend might lead to a bright future for business in the long term, with a data-driven tax authority offering better and cheaper services, providing a higher degree of tax certainty and predictability, and significantly reducing the cost of compliance. But the transitional phase in the short to medium term will be turbulent and present some entirely new challenges for companies to handle.

To preserve planning security and avoid any unsuspected surprises uncovered by data-fuelled tax administrations, organisations will have to rapidly get their tax capabilities up to the same level at which the authorities are operating. 

 

To preserve fiscal efficiency and exploit the remaining room for manoeuvre in a transparent, real-time tax world, companies will have to fully comprehend the data they produce and run a digitally enhanced tax function harnessing the processing power of machine learning, AI-based systems, advanced analytics and the like.

The key question: Will you understand your data before the tax authorities do?

 

Digitalisation meets tax authority: the consequences of the Zero Cost of Control phenomenon for your business is available in English.

 

Download the full paper here

Everything in short

5 reasons why

4 reasons why landscape of public administration will digitally transform

  1. The nature of tasks carried out by the public administration is particularly suitable to digitization
  2. They have a much larger data pool than individual businesses in order to effectively train algorithms
  3. They have significant resources available to invest
  4. They are under pressure for change to deliver more with less
4 reasons why

4 reasons why tax authorities will change first?

  1. Taxation and its revenue are crucial for a country
  2. Strong incentive for politicians to maximise tax revenues
  3. A need to close the gap between rising expenditure and tax revenues
  4. Tax information is often standardised and therefore easy to digitize


 

What are the consequences?

Public administration will be a lot more productive which will be felt in four dimensions:

Volume, depth, breadth and speed of their work

 

This will result in greater transparency of your tax data

 

Power structures of and relationships with tax authorities will change

Fewer more centralized but stronger and more efficient bodies

 

Are you ready for the digital world of tax? 

In this new world, your in-house tax function is going to need new capabilities to give management the same level of comfort on tax compliance and your interactions with the authorities. You’ll need to invest just to stand still.

Find out more

 

Contact

Christoph Schärer

Tax Partner, Chief Digital Officer Tax and Legal, Zurich, PwC Switzerland

+41 79 745 09 26

E-Mail

Dr. des. Christian R Ulbrich

Assistant Manager, Tax Disruption Think Tank, Zurich, PwC Switzerland

+41 58 792 23 16

E-Mail