Two years after the Tax Cuts and Jobs Act changed the way we look at the money our companies make, increased our employees’ take home, and made life a bit different in the finance department, could more change be coming? While it’s already known one party is looking to undo the cuts in income taxes for corporations and individuals, a majority of professionals expect changes no matter who is in office.
Changes on the Horizon
According to BDO and Accounting Today, 97 percent of corporate tax executives polled by BDO USA predicting more changes will come after the November election. Added to this 55 percent expect changes no matter who’s elected.
However, many still consider that adjusting guidance still remains the top concern for finance leaders and many are looking for additional accounting guidance for the digital economy.
“While global standards around digital taxation are still in flux, they will undoubtedly have a significant impact on any business that sells across borders,” said Monika Loving, managing partner and international tax services practice leader at BDO USA, in a statement. “While these rules could bring some standardization to the patchwork quilt of current regulations, they could also multiply the compliance and reporting requirements for multinationals. Any business that conducts cross-border sales should pay close attention to the OECD’s work in the coming year and should map the effect potential scenarios would have on their overall tax liability.
Five Top Concerns for the finance Department During Tax Season
Citing international tax provisions like the Base Erosion Anti-abuse Tax (BEAT) and Global Intangible Low-Taxed Income (GILTI), respondents to the BDO survey found the following to be among the top tax concerns heading into the third decade of the 2000s.
- Adjusting to the continued guidance on federal tax reform changes: Cited by 26 percent as their top concern, the potential for change is always worrisome in an election year, and with certain elements of the TCJA still being hashed out, many are waiting for additional guidance.
- Legislative changes at the state and local level: Another consideration raised by the TCJA, state and local rules have also spent a lot of time changing in the past couple years. From changes to the way sales tax is collected to new taxes levied in states, any changes that take place on the local level affect finance professionals at businesses as well. 23 percent consider this their top worry.
- Taxation of digital services: It’s not just the concept of a Netflix tax, but with a variety of new guidance presented including in-game currencies and new subscriptions, 18 percent are worried about the impacts of digital taxation.
- Navigating tariff changes and trade tensions: Though less of a concern than in years past, trade concerns still remain atop the mind in the finance department, with 17 percent worried about how tariffs will affect them.
- Growing scrutiny of the taxation of foreign earnings: Following releases of the Panama papers last decade and increased arguments for transparency, 16 percent of finance professionals consider this atop their list of concerns.
2020 marks a moment of significant change. When will the impending economic downturn come? How will companies deal with their finances after the Wayfair decision? Will we finalize a deal with China?
Though companies face a variety of long-term worries, it’s your job to ensure the ship is steering the right way. Ready to take control of your finance department and take command of the controller post? We invite you to read the entire BDO report and subscribe to our newsletter for all the latest.