Scotland needs to step up to the global stage
“Scotland needs to stop looking inwards. Yes, England is a major trading partner, but Scotland must become a player in its own right on the international stage.”
This the advice of Dr Professor Jeffrey Owens, Director of the WU Global Tax Policy Center at the Institute for Austrian and International Tax Law and Senior Advisor to the Global Vice Chair of Tax at EY.
For Scotland to take its place on the world stage probing questions about the state of the Scottish tax system need to be asked:
“Does the Scottish tax system produce a competitive environment that not only attracts inward investment, but also facilitates Scottish enterprise to be competitive in international markets?” wonders Jeffrey.
“And what can be done at the tax level to make sure SMEs are competitive in a digital environment? Because the digital age is upon us – borders no longer have any meaning.”
A Tsunami of tax disputes
The ability of the Scottish tax system to support business in the global market is just one of the topics Jeffrey will tackle at the ICAS Tax Conference on 23 May.
The conference theme ‘Tax in Uncertain Times’ is one which resonates with Jeffrey’s work.
An uncertain tax environment has a negative impact on domestic investment and foreign direct investment, Jeffrey explains. This is why it is so important that we ask governments what can be done at the national and international level to reduce tax uncertainty.
Progress is needed and soon, as the shadow of Base Erosion and Profit Shifting (BEPS) looms over the UK.
“We are going to see a tsunami of cross-border tax disputes as a result of BEPS. If you think it’s bad now, just wait. The number of disputes is going to treble, quadruple even. Between OECD countries, between OECD countries and developing countries, and between developing countries themselves.”
Dispute resolution mechanisms need to be brought into the 21st century: tax professionals need to see what they can learn from arbitration provisions in trade agreements
A toxic mix: tax, politics and economics
Tax is just one aspect of the uncertainty triad: politics and economics complete the picture.
Political uncertainty in the form of Brexit, a possible second Scottish independence referendum and the effect that major global players such as Russia, China and Brazil have, must all be considered.
From an economic point of view, Jeffrey is not convinced that we have absolved ourselves from the 2007 financial crisis.
“There is a lot of economic and political uncertainty around and what we have to avoid is adding tax uncertainty to that toxic mix.”
A brave new world
But it’s not all stark warnings and doomsday predictions for tax practitioners. Jeffrey believes the world of tax is going to get a whole lot more interesting as a result of digitisation. “Practitioners will have to get to grips with blockchain and other digital disrupters.”
And for those starting out in the profession, he has some important advice.
“You have to learn not just to be a good tax technician, but to be a good tax diplomat. You must be aware of what’s happening internationally if you are going to be able to do your job.
“There will be a lot of challenges for tax practitioners in the future, but for those that make the effort to understand broad policy trends and learn new technologies they are going to have a very interesting job.”
The ICAS Tax Conference 2017 takes place at the Radisson Blu Hotel, Edinburgh on Tuesday 23 May. Cost: Members and Students: £192 Non-members: £234 CAPS Firm: £174. All prices include VAT.