Tax is like a coin with two sides. On the one hand, it is a mandatory social contribution and on the other, it is a cost like any other. Governments need tax revenues to run the economy and drive specific objectives. Businesses discharge their social and tax obligations by paying their fair share of taxes while optimising tax costs.
India is currently the fastest growing economy in the world. 1 The sustained growth of a country largely depends on the sustainable growth in tax revenue built around an effective trust-based tax and compliance system. At 11.7%, India’s tax-to-GDP ratio2 is significantly lower compared to that of similar sized economies whose ratio is between 20% to 25%.3 The Government is expected to adopt various measures to increase this ratio for India.
Be it in India or other global economies, tax authorities are leveraging advanced technologies to streamline tax administration and combat tax evasion effectively. International data sharing mechanisms, including bilateral tax treaties and multilateral initiatives, are facilitating cross-border information exchange. While these developments have resulted in transparency, efficiency and speed, on the flip side, stringent compliance and reporting requirements, and incremental operational intricacies have made the tax function for businesses all the more challenging.
Therefore, rapid technological adoption is necessary for the tax function to manage compliance and ensure that businesses pay their fair share of taxes in the countries they operate. Advanced technologies including generative AI (GenAI) are increasingly transforming businesses, reinventing systems and gradually reshaping the tax ecosystem.
Technology can further enhance tax transparency. For instance, automated data analysis could facilitate the publication of a tax transparency report that factors in the company’s tax story, providing insights into its tax practices. This transparency can go a long way in building trust with the stakeholders, which is an imperative for business continuity.
This edition of Immersive Outlook examines how the three T’s of tax – technology, transparency and trust – are interconnected and are integral to the shaping of a more sustainable business. The first article ‘Three key levers to build trust with stakeholders’ looks at the benefits of promoting tax transparency and tax-related disclosures to build trust. The second article, ‘Driving connected compliance through technology’ offers solutions to streamline tax compliance processes and enhance transparency, while the subsequent article, ‘Four ways AI can re-engineer the tax function’ highlights the indispensable use of AI in tax, and underscores how the new order of the tax world will have technology at its heart. The concluding article in this edition, ‘Tax Transformation 2.0’, outlines what a future-fit tax function could entail and its contribution to the organisation’s overall business transformation initiatives.
We hope you will be able to derive insights from these articles. Reach out to us if you would like to have a more detailed discussion on any of the aspects we have touched upon.
Vishnupriya Sengupta Senior Director, Markets
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Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.
