The third major challenge for multinationals is related to the international tax reform, comprising the two-pillar agreement signed under the coordination of the Organization for Economic Co-operation and Development (OECD), but also the digital service taxes and the United Nations (UN) initiative for international tax cooperation, recently launched in response to the developing countries' request.
Thus, 54% of participants in the survey expect more complexity in tax reporting under Pillar II of the OECD reform (the global minimum corporate tax), which will be implemented over the next three years. In addition, as Pillar II eliminates the advantage of countries that previously competed for investment based on low corporate tax rates, 77% of participants anticipate those states to develop alternative tax incentive measures for this purpose, compatible with the Pillar II rules. On the other hand, the implementation of Pillar I of the OECD reform (partial redistribution of taxing rights on profits among the countries in which the revenues are obtained) remains uncertain, as the signatory countries failed to reach a final agreement by the deadline of June 30, 2024.
Under these conditions, the participants in the study expect the UN initiative to focus mainly on the taxation of digital services, on issues related to ESG considerations (environmental, social, governance), ensuring an equitable fiscal approach across developed and developing economies, but also on the relocation of taxing rights from residence jurisdictions to the source countries.
"The trends highlighted in the study are also valid in Romania, as the new reporting requirements, such as those imposed by the GloBE information return (the global anti-base erosion rules) related to Pillar II of the OECD reform or by the EU Corporate Sustainability Reporting Directive (CSRD), also target companies operating on the local market. And these reporting requirements involve the transfer of a very large volume of data between taxpayers and authorities, so the digitalization process, which has started in Romania several years ago and already is in an advanced stage of implementation of electronic reporting systems, such as SAF-T, RO e-Invoice and RO e-Transport, must continue. To this end , the tax authorities are to develop appropriate tools to analyze the data they receive through these systems, so that the digitalization benefits can become visible both for taxpayers, by simplifying reporting procedures and tax controls, and for authorities, by streamlining tax audits, reducing tax evasion and, finally, by collecting higher revenues to the state budget," said Dan Badin, Tax Partner, Deloitte Romania.
Although the use of artificial intelligence (AI) in tax compliance is in its very early stage, about two-thirds of respondents (66%) expect it to be widely used in the next three years, but under significant human oversight. The expected benefits of using AI-enabled solutions are improved accuracy in tax reporting (34%), reduced costs (23%), greater consistency in tax strategy across the company (15%), greater compliance with current regulations (14%), more time/focus to spend on core functions (14%).
On climate and sustainability, taxes on energy consumption have the most significant impact on companies' activity (40%), followed by carbon tax (33%). On specific measures, around 80% of participants reported being affected by the EU Carbon Border Adjustment Mechanism (CBAM - carbon tax) directly or indirectly.
Deloitte 2024 Global Tax Policy Survey, now at its 11th edition, was conducted among tax managers and CFOs, in order to analyze the impact of the international tax regulations on companies worldwide. This year's survey involved more than 1,000 tax leaders in 28 countries.
