EY Tax Survey Shows Ripple Effect of Federal Tax Reform
Now that federal tax law changes are in place, the 13th Annual
The international provisions, in particular, may lead states to choose against conformity due to their effect on states' corporate effective tax rates. Among new policies, 40 percent believe the global intangible low-taxed income (GILTI) provision will have the most impact of affecting rates, followed by the transition tax (28 percent), base erosion and anti-abuse tax (BEAT) (23 percent) and foreign-derived intangible income provisions (FDII) (9 percent).
"All these changes produce a ripple effect of planning and implementation challenges, but they also leave corporate tax directors with an optimistic view of the potential economic impact," said
The survey results follow a change in focus from planning for the Tax Cuts and Jobs Act to implementing the new law. Six months ago, 70 percent of
Other Distractions
Amid the tax compliance and planning challenges from tax reform, two-thirds (66 percent) of respondents are also preparing for M&A activity in 2018. Among them, 69 percent need to make changes to tax planning and the tax function.
Despite talk on
Teaming and Technology to the Rescue
To address the volume and pace of change, 23 percent of respondents said they are adding outside resources to supplement their team and technology.
"Technology and innovation are constantly changing the way tax operates, collaborates and interfaces with outside support services or tax authorities," said Barton.
Overall, 64 percent of respondents say they are using new technologies as they seek efficiency, accuracy and consistency of administration or classification of assets or transactions. Most of those companies (89 percent) focus on one type of innovation at a time, though combined efforts can be found:
* Advanced Data Analytics: used by 84 percent
* Robotic Process Automation: used by 37 percent
* Machine Learning: used by 9 percent
* Other Artificial Intelligence: used by 13 percent
Last year, almost 40 percent of organizations were investing in new tax management platforms (18 percent) or new enterprise-wide systems that make the tax function more efficient (22 percent). That trend continues, with a slight shift in 2018. Thirty percent are still investing in new tax technology, but another 8 percent are choosing to outsource most of the work that requires the latest innovations. Even among companies that want to develop their own capabilities, 54 percent use outside services to develop or help develop them.
Barton noted, "The challenge of developing and managing ever-changing applications doesn't pay off for every company, particularly those who want to collaborate and share data as part of a managed service agreement anyway."
About the survey
The 444 respondents represent senior tax practitioners that participated in the EY 13rd Annual
About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more of the member firms of
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