Tax Administration 2025The imperative to become agile, adapt and transform in the Cognitive Era.

In the next decade, tax administrations face daunting challenges

lower taxeslimited resourcesresults-based budgeting

open governmenttransparency and accountability

citizen expectationslegislative oversight

political agendaselevated demands for compliance

population dynamics

“uberization”

interconnected economies

Demographic outlook

Smart,skilled workers

of the global middle class

of the global middle class

Developing country Developed country

250million

migrants

The world’s population is aging. This increases health care and other social services costs.

Children 0-14Adults 65+

Economic outlookThe global economy is more interconnected.

• Economic power shift from West to East

• Asia is exceeding US and Europe in R&D spending

• Trend in exports − European dropping from

39% to 32% − Asian rising from 29% to 35%

• High GDP growth, improved FDIs, and rapid industrialization to give rise to a new lot of emerging countries, beyond BRIC nations, that contend to become next decade’s economic leaders

Mexico

South Africa Indonesia

PolandTurkey

Thailand

Vietnam

Phillipines

Egypt

Next game changers

Trillion dollar economies

USD 2,327billion

USD 1,041billion

USD 2,441billion

USD 3,071billion

USD 730

billion

USD 635

billion

USD 772

billionUSD 323

billionUSD483

billion

USD653

billion

Nigeria

The workforce grows smaller

• The tax base grows smaller. As many as two billion jobs could disappear by 2030.

• It is possible that the workforce decline will occur faster than technology will be developed to eliminate the need.

Political outlookChange is inevitable. New players emerge. The balance of power shifts. Nations are more closely interrelated. Their level of cooperation is the open question.

Impacts to economic results are globally interconnected

• Stalled engines: USA draws inward and globalization stalls.• Fusion: China and USA collaborate, leading to broader global cooperation.• Genie-out-of-the-bottle: Inequalities increase social tensions.

The US is no longer the ‘global policeman.’• Non-state world: Driven by new technologies, non-state actors take

the lead in confronting global challenges.

3D

Technology continues to transform the world

• Cognitive computing• Internet access • Robotics• Drones• 3D printing• Internet of Things

• Digital currency• Blockchain • Dark web/dark net• Virtual reality• Mobile

Operational environment outlookThe rate of change and budget pressures are greater than before, and more of the change is disruptive, rather than incremental.

• Governments must collect more revenue with fewer resources.• Technology is the area of largest investment after human resources.• New economy employees require a new tax/benefit category. Ex: Uber effect.• New business model impact will force multiple policy changes in tax, labor and

regulatory environment.• Cooperation in cross-border fraud must improve and adapt to counter this threat.

Focus on better use of the three basic resources• Human - Improving training of employees, especially

in developing countries• Data - Focus on management of data and metadata• Systems

− Flexibility/adaptability must be a requirement when modernizing − Extensibility is critical as tax administration roles

and responsibilities evolve

Ecosystems• Build relationships and drive strategic relationships• Base tactical and technical relationships on open

communication

Preparing for the future“The best way to predict the future is to make it.”

Preparing for the futureProcess management

• Business processes for tax administration should begin to standardize as enforcement continues to be a global challenge.

• While tax policy must largely remain within the scope of sovereign countries, many processes could be standardized, as has been the case in customs and treasury functions.

• Developing country modernizations have been delayed for years by spending time reinventing the process wheel.

• Everything should be documented in a process management tool so it can be changed easily and allow the creation of systems requirements.

It’s never too late

Agencies should• Build relationships and drive strategic

relationships• Base tactical and technical

relationships on open communicationTax

Administration

Tax software companies

Payroll service

providers

Accountants

Financial institutions

Other agencies

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Want to know more...Read the Tax Administration 2025 white paper to learn more about the global outlook.