What does 2024 have in store for the tax industry?

2024 looks set to be another year of upheaval in finance and accounting, especially as a general election is looming. With tax always one of the most contentious and convoluted subjects on the political agenda, the industry is bracing itself for another round of changes. Aside from political uncertainty, organisations will be grappling with a variety of other challenges - the majority of which are aftereffects of last year - the rise of generative AI, Pillar Two, and the war for talent. AI will start to reshape tax careers Although there’s now a growing appreciation of how generative AI can positively transform many aspects of work and everyday lives, there remains unease about its impact. There will be plenty more debate this year as users get increasingly confident with existing AI tools, enhancements are released, and new commercial applications hit the market. What is certain is that AI is here to stay. Within the tax industry, it has the potential to take on large tracts of mundane work by automating routine and time-consuming processes. Algorithms can analyse vast amounts of financial data efficiently, reducing the tedium of manual entry and reconciliation and enabling faster and more accurate data processing. AI can also be leveraged to interpret and extract relevant information from complex tax rules and documents - it could assist tax professionals in staying up to date with ever-changing local and global tax regulations. Already, some cases of tax overpayment have been uncovered and organisations have secured reimbursements from HMRC. There are likely to be further revelations, both positive and negative, as the use of AI becomes more widespread. Change for the better The introduction of AI will come as a long overdue relief for many tax professionals who will relish being freed up to focus on more interesting, value-add tasks, such as investigating anomalies, making comparisons with historical data to highlight trends, and flagging future issues, as well as providing consultancy to clients. AI has the potential to improve productivity, accuracy, and the strategic value that tax professionals bring to customers. Consequently, job satisfaction across all levels of staff should start to increase. Shifting from routine tasks to more intellectually stimulating work, offers the opportunity to reposition careers in tax to help fill the growing skills gap. Graduates are more likely to be drawn to a dynamic sector that combines their knowledge with cutting edge technology, creating a forward-thinking and stimulating work environment. AI’s capability to support the development of junior roles in shorter time frames, will enable individuals to apply what they have studied more quickly, ensuring work is more fulfilling from the beginning, making careers in tax more appealing and relevant to Generation Z. To keep abreast of the opportunities that AI is bringing, organisations will need to keep up with the pace of change or risk losing out to competitors who are quicker to embrace new technology. Seeking out trusted partners who can facilitate this transformation will be key to the successful adoption and integration of AI. Pillar Two comes into force While the corporate finance and tax world were exploring the potential of AI during 2023, the tax rules for the new Pillar Two regulation were also being understood by hundreds of tax and finance teams across the country. Unlike many regulations in the past, Pillar Two is showing no sign of being delayed or watered down so, by the summer of 2024, the bulk of the rules will likely come into force. So, for multinational enterprises with annual revenues of 750 million Euros or more, Pillar Two is an inescapable priority for this year. Its aim is to establish corporate tax parity across countries, discouraging the practice of lowering taxes as an incentive for foreign business investment. Businesses within scope will be required to pay a global minimum tax of 15% on income received in each country in which they operate. Gathering relevant data to make these calculations is a colossal task that will accelerate demand for software to manage Pillar Two and services that facilitate deployment. Not only will organisations need capable tools in place to consolidate data requirements, tax and finance teams must also cooperate and allocate resources effectively to meet the intertwining compliance obligations. For those that are co-sourcing this could bring further levels of complexity if internal and external parties are working off different systems, impeding collaboration, accuracy, and final submissions. The quest for efficacy and efficiency is likely to accelerate the trend towards global data integration through the deployment of solutions that provide a single, unified platform. By bringing together disparate data sources into a cohesive, secure system, different teams, departments, and business partners will be able to work together seamlessly on Pillar Two obligations, as well as many other compliance and financial requirements. Balancing productivity with staff welfare It is not all tax and technology specific changes that will dominate the next twelve months – organisations will continue to redefine the workplace during 2024 in an effort to align business needs with a healthy work-life balance for their employees. Flexibility will be a key factor to entice talent into the tax sector. Remote and hybrid working will remain part of the picture, dependent on the type of work and level of collaboration required. High on the agenda will be mental health, recognising that working permanently in an office isn’t right for some, and working remotely 5 days a week isn’t preferable for others. Investing in staff well-being will grow in 2024 to help mitigate both work stress, and external pressures such as high inflation, mortgage worries and concerns over escalating military conflicts in the world. It is important that organisations do all they can to help stop their employees feeling overwhelmed by developing solid mental health and social well-being programs to help address issues before they become serious. In the past, businesses have focused primarily on physical health, but this should be extended to a holistic approach by offering access to therapists and mindfulness classes, funding gym membership and arts/crafts evening classes, arranging activities to encourage a sense of community, and providing financial advice. These staff-oriented initiatives will help to attract new talent and maintain a committed and loyal workforce. A surprise or two Perhaps 2024 won’t turn out to be quite such a rollercoaster of a year as recent ones, giving organisations some breathing space to plan how to take advantage of new technologies as well as focus on employee development and well-being. But, as past experiences like Covid-19 and ChatGPT have shown, the future is unpredictable, so there might be surprises waiting in the wings – only time will tell. However, with careful preparation for the known challenges, and an open mind to anything else that comes their way, organisations should be able to weather unexpected twists and take advantage of any new opportunities that might be in store this year.