Navigating 2024: Essential insights from Synergy 2023

Once again, our Baker Tilly team was proud to attend the Thomson Reuters Synergy 2023 conference and sponsor at the platinum level. As we settle into 2024, our team of tax and technology professionals have outlined a few of the key updates and critical sound bites from our week of Synergy excitement that may have a lasting impact on your organization.

Technology is an ever-changing landscape, and this year we continued to witness that at Synergy. From tax law changes to plan for (such as Pillar Two), Artificial Intelligence (AI) increasing the ability of professionals to attain more consistency and a higher frequency of updates, an increased utilization of Alteryx/connectors/APIs, and the use of graphical representation of our results, it was another exciting year.

As you review these trends, know that we are here to help whether your needs are related to tax technical matters or the many aspects in which we can help drive efficient utilization and maximization of technology, including Thomson products, within your tax functions.

Preparing for tax law changes

The introduction of Base Erosion and Profit Shifting (BEPS) 2.0's Global Anti-Base Erosion (GloBE) rules marks a significant shift in global taxation, affecting multinational enterprises (MNEs) with revenues of at least €750 million. The rules set a 15% global minimum tax (GMT), which according to a more recent publication (OECD Taxation Working Papers No. 68, ‘The Global Minimum Tax and the taxation of MNE profit,’ Jan. 9, 2024), is estimated to increase corporate income tax (CIT) revenues by $155 billion to $192 billion on average per year. The computation contains nuanced rules and intricate calculations that could lead to unexpected “top-up tax” liabilities for any variance between the GMT and the calculated effective tax rate under the GloBE rules. Many countries are legislating (or have already legislated) these rules into local law, which more generally may be effective beginning in 2024. MNEs should act now to assess the impact of these new rules and local laws. Importantly, the new tax framework may impact even MNEs with effective tax rates initially thought (before applying the GloBE rules) to be comfortably above the 15% minimum rate, making compliance a challenging task. In almost all the tax department surveys taken in 2023, Pillar Two was cited as a major source of potential risk for MNEs.

Any tax reporting and transfer pricing technology, likewise, must natively incorporate the new framework and must be capable of modeling financial scenarios that consider a range of complicating factors, including different financial forecasts and new initiatives in key jurisdictions. Tax departments need to invest in technology tools that can accurately and timely integrate tax related data across their organization, whether to calculate their global tax liability, comply with Pillar Two and/or assess indirect taxes owed in different jurisdictions.