Technology to the rescue: six global trends are shaping the tax world as today's tax managers are inundated with complex rules and myriad activities surrounding reporting and compliance. Technology--as a solution--is advancing almost as rapidly as the problems present themselves.

• Author: Walsh, Chris
• Position: TAX

Reflection on the economic travails of the past three years leads to the belief that the stress on individuals, businesses and even governments will continue for the next five years or so. One of the most problematic and worrying effects of this for all--but particularly for businesses--is that long-term views and planning will become increasingly neglected as present concerns become all-consuming. Indeed, stress fosters a short-term outlook that is often detrimental to long-term decision-making and the future well-being of the entity.

[ILLUSTRATION OMITTED]

For example, unemployment has deflected individual attention from forms of long-term planning, such as saving for retirement, building college funds or growing stock portfolios. Companies facing the stress associated with difficult market conditions will redirect focus away from five- and 10-year plans and instead take action to handle immediate concerns, such as making payroll or generating additional income from trade or consumer promotions and special offers.

For governments, the present need to raise revenue will defer more responsible, balanced long-term decisions. This environment has led governments to borrow vast amounts of money and adjust tax rates in an effort to minimize the impact of the global recession--with limited positive effects.

In this ongoing, stressful business environment, six key drivers will affect the tax world over the next five years. On the other hand, technology can provide a solution that could help ease many pressures of the complicated environment that's expected to continue.

1 Global Economic Environment

First and most obvious of the trends impacting the tax world is the global economic environment where two key considerations come into play: Governments need to raise more revenue to fund unemployment and social security benefits to prevent national economies from deteriorating to an unacceptable level. And indirect taxes have been overtaking income taxes in becoming the main source of government revenue.

There is broad recognition that the world has become a highly tax-competitive market and attracting inward investment relies heavily on a country's tax environment. For high-tax nations, further increases in income tax rates will only serve to make them less competitive, so indirect taxes such as a value-added tax (VAT) or a goods and services tax (GST) will continue their growth as prevailing global tax types.

These taxes will rise steadily, further...