Important Tax Developments in 2022

Numerous technological advancements can make tax administration easier for enterprises, citizens, and tax officials.

FREMONT, CA: To stay up with changing customer expectations and the opportunities afforded by adjacent businesses such as retail banking, fintech, payments, and connected supply chains, tax authorities must, in many respects, become disruptors and innovators. Using intelligent industry, digital data, and the cloud will simplify tax administration for firms, citizens, and tax authorities.

As governments scurry to respond to the huge issues confronting society, economies, and the planet, swiftness, and adaptability have become crucial characteristics of public authority. During the pandemic, national treasuries were frequently required to abandon traditional structures and procedures to disburse the enormous quantities of money so urgently needed to sustain social cohesion.

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In response, several taxes and customs authorities are embracing new and innovative methods to sustain the flow of essential tax revenues in response to societal changes and the financial imperatives of the health and climate crises while preserving security and compliance.

Digital technologies, data, and the cloud provide the necessary transformational tools. Automation and artificial intelligence are replacing manual processes, resulting in more agile, service-oriented firms that can meet customer needs for convenience, speed, and ease of use. Data and analytics inform decision-making and financial planning, nudging citizens toward the proper behaviors and assisting them with their rights and responsibilities. Skilled tax professionals are becoming active agents of change, developing more adaptable and technologically-enabled tax regimes that contribute to developing essential social, economic, and environmental policies.

Developing trust and safety will help transform the role of tax authorities in the business and society: As tax authorities continue to fight back against cybercriminals by boosting their defenses with increasingly rigorous and sophisticated cybersecurity measures, they are not only preserving vital national resources and infrastructure, but they are also building that invaluable commodity—trust.

Trust is essential to the transformation of tax authorities from enforcers to business enhancers and active participants in the common good, providing the resources to implement governments' most important social, economic, and environmental goals.

Trust can be transformative in the world of taxes. When individuals have confidence in their tax authority, they are more likely to pay their taxes on time and in full. When citizens believe that their tax system is fair, safe, transparent, and operating in the best interests of society, they are more likely to share their data, adopt digital processes and current payment systems, and employ assistive technology such as cognitive care.

Under these conditions, businesses are more likely to view tax authorities as potential partners, participants in rich data ecosystems, collaborating and sharing information on their tax affairs while bringing societal benefits by tracking ethical practices such as the living wage or compliance with modern slavery legislation. This is a significant expansion of the tax authority's conventional duty.

As these new relationships—and the trust at their foundation—get established and flourish, the collaborative spirit may spread throughout economies and communities, fostering sustainable economic growth, bolstering enterprises, and fulfilling social responsibility objectives.

Enhanced cybersecurity has also enabled tax authorities to adopt hybrid working during COVID-19, a moment of unprecedented danger and vulnerability with criminals eager to exploit any vulnerabilities. At the same time, public sector institutions hurried to create pandemic remedies. As thieves become increasingly innovative in exploiting vulnerabilities, this must remain a priority, with a strong emphasis on supporting and safeguarding users in their vital tasks through education, new processes, and technological enablers.

Participation will be stimulated through user-centric products and services coupled with technology: Customers expect a rapid, seamless, and personalized multi-modal digital experience, informed by an understanding of life events and, in the case of their tax status, accurate information about tax duties and entitlements, regardless of the service provider.

In 2022, the push for hyper-personalization will intensify, with tax authorities adopting best practices from across the economy to apply user-centricity to all stages of the customer journey, to increase trust, confidence, and compliance with tax laws and obligations, while also reducing the need for expensive agents and accountants.

Digitally native customers will embrace self-sovereign data practices, ensuring that the information tax authorities keep on them and their enterprises are accurate and determining with whom else to share it. This will lead to new types of data exchange and permission across jurisdictional boundaries, facilitating ease of movement and enhancing overall tax compliance by making pre-populated tax reports and payments simple.

In the meantime, advancements in mobile technology, 5G, and edge computing will enable the availability of different media and AI-enabled tax administration applications, addressing the demands of all taxpayers, but especially younger taxpayers for whom smart devices are natural and the default. By delivering a rich user experience, new taxpayers can be better informed about the role of tax in society and gain the confidence to handle their tax affairs and exchange data from the palm of their hand.

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