2016 taught us to expect the unexpected. Donald Trump was elected President, the Panama Papers were leaked, Brexit actually happened, changing the GST did not… technology upped its disruption ante, the OECD shone the spotlight on its BEPS project and the crackdown on multinational tax avoidance got even more real. These events have changed the face of the financial services industry and given the Australian corporate tax system a shake-up. If 2017 is anything like the year gone by, we’re in for an interesting ride.
Australia’s financial services sector is the largest contributor to the national economy, contributing around $140 billion to GDP over the last year. It has been a major driver of economic growth and with 450,000 people employed in this sector, it will continue to be a core sector of Australia’s economy into the future.*
Yet, as dominant and resilient as the industry may be, it is in no way immune to global and domestic pressures. Almost a decade ago, the Global Financial Crisis rocked the economy and the industry has been rebuilding trust and confidence since. Now the growing onslaught of the OECD’s Base Erosion and Profit Shifting (BEPS) project, FinTech, blockchain and robotics threaten to disrupt the industry again. For those practising in the industry, the key is to understand the changing players, influencers, instruments and markets – and more importantly, how they all impact the future of corporate tax in Australia. 2017’s Financial Services Taxation Conference will help practitioners do just that, and here we take a look at some of the key sessions and speakers from this year’s event.
The current state of play
In a post-BEPS world, international tax issues will only continue to crop up more and more. The sessions at the conference will focus on hybrid mismatch arrangements, branch/permanent establishment attribution issues, CFC rules, thin capitalisation, transfer pricing and Division 6C – core topics that will change the financial services industry and the way regulators operate.
There is already so much going on in the financial services sector right now.
The OECD continues work on its BEPS project, the Senate was due to issue its report on its Inquiry into Corporate Tax Avoidance and a number of companies signed up to the Board of Taxation’s Voluntary Tax Transparency Code. In addition, the 2016-17 Budget proposed corporate tax cuts, the Government ruled out changing the GST and an exposure draft for implementation of the Diverted Profits Tax (DPT) was released to address multinational tax avoidance.
The Panama Papers leak, the Chevron transfer pricing case, the introduction of the Multinational Anti-Avoidance Law (MAAL) and DPT have all roused public interest in the taxation of multinationals. Last year’s election campaign might have shied away from the topic altogether, but the Government has since turned its plan to tackle tax avoidance up a few notches with the implementation of the MAAL and DPT. More than ever, large corporates are under the microscope with their tax activities.
In his session, Tony Cooper (EY) will compare and contrast the MAAL and DPT, considering whether they apply and where they intersect. The UK experience of its DPT will also be considered. From a regulator’s point of view, Jonathan Woodger (ATO) will provide comments on the ATO’s guidance in relation to MAAL and how it proposes to apply the two new regimes.
New laws, new flaws
Will new laws be effective in combating tax avoidance? In the wake of these major changes, the financial services industry is once again grappling with uncertainty, gaps in the law and legislative reforms. In their keynote presentation, two speakers from different perspectives – Michelle de Niese (Corporate Tax Association) and Professor Miranda Stewart (Crawford School of Public Policy) – will consider where the Australian corporate tax system is heading, whether it needs reform, and what that reform should look like.
This new world of transparency extends also to the new common reporting standard (CRS) which commences on 1 July 2017. With only four months to go to implementation, Fred Law, CTA (NAB) and Anthony Siouclis (ATO) will discuss the effect of the 16 choices available to Australian financial institutions, the impact of the US position on CRS and the interactions between CRS, the Foreign Account Tax Compliance Act and Anti-Money Laundering.
Speakers Steele Broderick, CTA (Treasury) and Natalie Raju (KPMG) will also delve into the proposed rewrite of the Taxation of Financial Arrangements (TOFA) as announced in the Budget, and provide insights around key legacy issues and the extent to which the proposed reforms should address some of these issues.
The technology-enabled tax function
For many, technology was initially regarded a disabler to the financial services and tax industries. The rise of FinTech threatened the stability of its incumbents and rocked the status quo. However, technology is now a major player in the corporate tax system and has forced tax functions to adapt and respond to the digital era.
The tax function is certainly evolving and broadening – and at exponential speed. What exactly are the key trends and how do these apply to the financial services sector?
Kelum Kumarasinghe (EY) and Simon Jenner, CTA (EY) will shed light on the digital era and provide a summary of the internal and external factors impacting the tax function. Their session will also cover the current tax technology trends being seen in the market, with a particular focus on data-driven tax audits, analytics, robotics, tax portals and blockchain.
With so many emerging disruptors and new laws affecting the financial services industry, it is no surprise that key players, influencers, issues and perceptions have changed. This year’s sessions have been developed to dig deeper into current issues as well as shed light on new trends that will change the industry going into the future. 2017 is gearing up to be an incredibly interesting year for financial services and tax!
Join us and all the high calibre speakers at The Tax Institute’s Financial Services Taxation Conference 2017 to find out more, 8-10 February 2017 at the Palazzo Versace on the Gold Coast.
* Backing Australian FinTech http://fintech.treasury.gov.au/the-strength-of-australias-financial-sector/