Accounting and tax remains a particularly complex area of business in 2024, with continuously increasing requirements at both global and local levels placing additional pressures on businesses that operate in multiple jurisdictions.
According to TMF Group’s Global Business Complexity Index survey, one in 10 jurisdictions identified the process of switching to digital platforms as a key driver of accounting and tax complexity for foreign companies. Digitalisation is a rising trend across the world, with over half (53%) of the jurisdictions in this year’s survey requiring at least some companies to issue electronic tax invoices. This is up from 38% in 2020.
Within the past year alone, there has been an increase of 3% in jurisdictions where it is compulsory for all companies to issue electronic tax invoices.
Policy change
In addition, many jurisdictions have introduced local requirements on top of global reporting standards, creating additional processes for companies to manage.
Another pressure is changing government policy. In some jurisdictions, updates to accounting and taxation policies are made frequently, resulting in new processes that are often implemented at short notice.
Many jurisdictions in this year’s survey have implemented OECD base erosion and profit-shifting (BEPS) regulations (81%) and require country-by-country reporting (83%).
For jurisdictions in the Asia-Pacific (APAC) and Europe, Middle East and Africa (EMEA) regions, it is common to see requirements for country-specific reporting in addition to the global standard, such as BEPS and Standard Audit File for Tax.
In APAC, 85% of jurisdictions require country-by-country reporting and 86% have implemented BEPS. In EMEA, the figures are 98% and 90% respectively.
Compliance penalties
The percentage of jurisdictions implementing penalties for doing business without registration and for missing tax filing deadlines has increased. The most common penalty for both infractions is fines, with 96% of the jurisdictions issuing them for failure to register and 100% for defaulting on deadlines.
Tips
Suggested ways to address these complexities recommended in the report include:
- using local experts to help stay on top of changing legislation, often by outsourcing key processes
- designating a project lead who will not only create a project plan and monitor activities for local compliance, but will also connect accounting and tax functions with other stakeholders, including IT and compliance service providers
- harnessing official support, as tax authorities in some jurisdictions show an increased willingness to offer help in navigating regulatory changes.
