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Tax may be certain, but how it should be collected and from whom is increasingly complex in a global, digital world

Tax may be certain, but how to collect it isn't

Diverse perspectives come together to explore the question of what to tax in the modern context.

Amy Diaz

Managing Director of Marketing and Communications, Global Tax & Legal

KPMG International


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Much of the architecture for global tax rules is a product of postwar institutions, context and culture. The world is now a very different place --so how to agree and enforce rules and regulations in a globally-connected system in a way that is fit for our global future? A new publication and unique event seek to address this difficult question.

It is now obvious that our tax systems, designed in the 20th century, need to adapt to today's realities. A world of full employment, with one job for life in an analogue national economy is fast giving way to flexible working in a complex digitally-driven economy that flows across borders - where everything is connected to everyone; these and other attributes of the modern world have major implications for taxpayers, tax systems and societies around the world.

KPMG International, as part of its ongoing global Responsible Tax project in partnership with Jericho Chambers, has brought together a broad array of voices on this subject in a new publication, What to Tax?, launched today in London at a special idea-exchange. Both the event and the publication seek to reimagine what responsible tax looks like in an increasingly digital, global environment. The responsible tax idea exchange brings together nearly [100] different voices for interactive discussions and hands-on workshops. With participants representing a wide range of different perspectives from businesses to NGOs to academia to policymakers.

“When we consider how different the world looks today, whether it be regulatory developments, technological innovation, globalization, new business or consumer demands, we need to ask whether the present tax systems are fit for today's realities. If not, how do we reimagine tax for the modern, world? That's what our external authors and KPMG professionals have tried to uncover in the What to Tax? publication, and we're going even further with these questions at today's event,” says Jane McCormick, Global Head of Tax, KPMG International.

As the publication notes, most of the spotlight of the global tax debate has been on how tax is collected from established, historic sources - most notably corporations and high net worth individuals, and the expectation is that this will (and must) continue. Tax professionals, policymakers and societies must continue to explore the issues that abound from these traditional types of collection, such as the impact of digitalization, the difference between avoidance and acceptable planning, the call for transparency and other key challenges.

“But as economies, cultures, technologies and societies change dramatically (in turbulent political, socioeconomic and technological times), there is a pressing need to discuss whether, in terms of the common good, we are taxing the right things and whether societies have established the right balance between those things that we tax,” says Jane.

Neal Lawson, of Jericho Chambers, provides the following example: “There is a flourishing debate on the taxation of digital goods, data and services and, of course, the taxation of robots as a way of redistributing the profits from any technological productivity gains, especially if we see a large net loss of jobs over time,” says Neal. “It is important to see an array of voices come to the table around these issues and around their broader societal impacts through a responsible tax lens. These are stakeholders that may not often find themselves in the same room, never mind in a collaborative discussion, seeking a common goal.”

Chapter contributors included, among others, Ruud de Mooij, International Monetary Fund, John Thornhill, Financial Times, Susanne Åkerfeldt, Swedish Minister of Finance, and Ifueko M. Omoigui Okauru, ICRICT (Independent Commission for the Reform of International Corporate Taxation), in addition to various tax specialists from across KPMG's global network of member firms, and many of these authors will also take part in today's event.

Some of the key questions participants will seek to address at the idea exchange cover and expand upon the questions that the contributors have aimed to tackle in What to Tax, including:

  • What are the limits of corporate, work and consumption taxes? What is the problem we are trying to fix?
  • What are the issues surrounding taxing assets over earned income?
  • What new areas could be taxed?
  • What problems might arise from taxing new areas? (For example, double taxation risk, new opportunities for evasion, levels of progressiveness, etc.)

“What is needed to help address these questions is a calm but determined and collaborative space to listen to the key voices and views; to learn from each other; and, crucially, to begin to understand each other’s assumptions so that real progress can be made, and that’s what today’s event is all about,” says Janette Wilkinson, Partner, KPMG in the UK.

These are huge and difficult questions to address, but they cannot be ducked. KPMG International, working with Jericho Chambers and many other partners and stakeholders, will continue to play an active part, not just in supporting corporations in ensuring they pay the right amount of tax, in the right place and at the right time, but also in helping to address some of the fundamental issues about how to build a responsible tax system that is sustainably fit-for-purpose in the 21st century.

A truly responsible tax system will need to be negotiated by all of us,” says Janette. “Politicians, officials, regulators, corporates, advisors, thinkers, campaigners, business leaders and citizens will all contribute.”

The Responsible Tax project will continue to connect the stakeholders needed to achieve this kind of consensus, not only through more publications roundtable discussions and Responsible Tax events, but through its quest to establish a global and multi-perspective alliance that wants to work together for the common good. The discussions continue, and additional viewpoints and voices are welcome to contribute to the digital community at Responsible Tax is everyone's business.


About the Global Responsible Tax Project

The KPMG Global Responsible Tax Project invites the full range of stakeholders, including taxpayers, academia, media, government, global bodies, politicians, NGOs and tax professionals, to inform thinking on what responsible tax behavior looks like in a global context. It is vital to hear as many views from as many places as possible. By driving an inclusive discussion, all stakeholders can contribute to responsible global tax behavior, action and advice. Learn more at Responsible Tax is everyone's business.

About KPMG

KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 154 countries and territories and have 200,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

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