Guest Blog: Navigating the global tax shift: Technology's role in calming the waters
By Mark McKay and Neil Fletcher, Managing Directors with Alvarez & Marsal Tax UK LLP in London and Danielle Cyrus, Chief Customer Officer at Arkk Solutions.
The butterfly effect. A tiny flutter of wings in just the right place can trigger a hurricane thousands of miles away. That is chaos theory.
What we are seeing across the global tax landscape today is not just one butterfly. It is a coordinated, strategic swarm of them, all flapping their wings in unison. The impact? Seismic shifts across the entire global tax and economic terrain. The "swarm" effect encompasses the combined impact of technological change, multiple tax changes, and simultaneous jurisdictional shifts. Regardless of one's view on US politics, the impact of its leadership cannot be ignored. US decisions create global ripples, affecting all businesses.
Global tax transparency will redesign international taxation, forcing major industry overhauls and placing greater accountability on taxpayers. Businesses need to get ahead of the curve now to manage and integrate their data more effectively to comply with stricter reporting requirements and increased scrutiny worldwide.
VAT
We have witnessed it firsthand through the implementation of Making Tax Digital (“MTD”) and e-invoicing, the rise of digital tax administration is revolutionising how taxes are handled, promising greater accuracy and efficiency. This transformation, however, demands close collaboration between tax and IT departments.
IPT
Many tax authorities are moving towards online platforms for IPT filing and payments. However, this brings opportunities for insurance companies. Automation tools can be used to streamline IPT processes, such as data extraction, reconciliation, and reporting, freeing up resources for more strategic activities.
Pillar Two
The Two Pillar process has been up and running since the inaugural meeting of the OECD/G20 Inclusive Framework in Kyoto, Japan in June 2016. There were 82 members back in 2016. Since then, the membership of the Inclusive Framework has grown to over 145 countries and jurisdictions, including 14 observer organisations.
In 2025, the OECD published a central record of legislation with transitional qualified status, which includes (i) 28 countries with qualified domestic minimum top-up taxes (QDMTTs), (ii) 27 countries with qualified income inclusion rules (IIRs) and (iii) 25 countries meeting both QDMTT and IIR qualifications.
Notwithstanding the ever-increasing complexity, and President Trump’s executive order stating that the US does not support the OECD’s Pillar 2 efforts, the timelines for Pillar Two compliance returns is becoming a near term reality for taxpayers. There are noises emerging from various European and US sources that may form the basis of a resolution with respect to the much-maligned UTPR as it applies to US multinationals. If this particular bug bear can be resolved, and some movement on the definition of refundable tax credits, then it is possible the US might engage more actively in the process.
In the meantime, the OECD hope to continue its work on publishing agreed upon administrative guidance. The fifth set of guidance released in January 2025 includes some practical assistance on the information returns, combined with more anti abuse and complexity in relation to the transitional period which is seemingly targeted at least in part at the new Bermudian corporate tax regime.
Despite all the twists and turns, Pillar Two is becoming a reality for taxpayers around the globe. It's complex but it's also a testament to international cooperation on a massive scale.
In light of all these developments, businesses need to ensure that they are putting themselves in the best position by investing in technology that supports their ability to not only manage the changing tax landscapes effectively but is also flexible enough to scale with the business and it’s growing needs. To this end it is critically important that firms look to automation that enables them to have full governance, control and transparency over their processes and their data lineage so that they can evidence their workings every step of the way and supercharge compliance. Platforms such as ARKK, that takes any data, from any source, in any format, and allows the same data to be used across various reporting requirements is one such solution to managing a host of tax processes and a great example of how firms can work smarter, not harder.
Mark McKay and Neil Fletcher, partners at Alvarez & Marsal Tax, along with Danielle Cyrus from ARKK Solutions, will offer practical guidance on navigating global tax challenges for insurance companies at the ABI Spring Tax Update on 20 March 2025.