INTRODUCTION
All the tax laws made by the government are important components for the economic system of every country because all the tax laws tell how a company should be conducted and regulated, developed, formed. In the past decade, globalization, changes in consumer patents or technology improvements have changed or revolutionized the functioning of companies. Looking ahead to 2024, there are a number of important tax measures that will define the business world, ranging from digital economy taxes to a global minimum tax.
For the contemporary business world, these adaptations are not simply something painful to accommodate — they can be viewed as ways of improving performance, formulating strategies for investment, and enhancing profits. Like any young business facing infancy problems or global companies struggling with issues of international taxation, it is necessary to keep pace with the changes.
This post will focus on significant changes in the tax system and their business implications. Here, we will cover all issues that define the new order of taxes like entrepreneurship tax relief, sustainability tax relief, technology in tax administration, and so on which every business owner ought to be familiar with.
- Taxation in the Digital Age
In today’s digital era, one of the biggest changes will be digitalization of tax system. Governments all over the world are adopting digital technology to make taxes better and simpler, to improve transparency and to reduce theft and dishonesty. The biggest example is India’s goods and service tax network (GSTN) and Value added tax (VAT).
For businesses this means real-time reporting and digital records. While this is more efficient, it also means investment in technology and training. Non-compliance can lead to penalties, audits, and reputation damage so it’s essential to stay ahead of digital tax requirements.
- Globalization and Cross Border Taxation
The biggest impact that globalization has had on the world is that it has increased our cross-border trade, investment and tax complexities. At the same time, as many companies are working at the international level, there is a need or expectation for all international companies to navigate through transfer pricing, double taxation treaties, and the base erosion and profit shifting framework through organization for economic cooperation and development (OECD)
The main objective of the first and second pillars of the OECD is to address the challenges of digital taxation and address the challenges of multinational companies. The first pillar of the OECD is that it distributes the profits among the market jurisdictions. If we talk about the second pillar of the OECD, that is that it sets the global minimum tax rate of 15%. These tax reforms are meant to curb evasion and dishonesty but require businesses to reevaluate their strategy and reporting mechanisms.
- Environmental Taxes
In today’s time, sustainability is not just a dirty word, but it is an essential requirement for any businessman. All governments are introducing green taxes to promote environmental responsibility. In today’s times, carbon taxes, plastic taxes and taxes on non-renewable resources are becoming the norm around the world. For businesses these taxes are a challenge and an opportunity.
- E-commerce and Indirect Tax
If we talk about e-commerce, then the rise of e-commerce has completely changed the retail landscape. E-commerce has also brought with it a lot of implications along with the changes. Use of online transactions crosses borders and jurisdictions. or with him make sales and use tax collection complex. The government has introduced many measures in the world, like the US Supreme Court Dakota vs. Wayfair case, which allows states to levy tax on online retail regardless of physical presence. Businesses need to navigate complex indirect tax rules and be compliant in multiple jurisdictions. What this simply means is that businesses should use tax automation software and work with tax professionals to manage business obligations.
- Corporate Tax Reforms
Corporate tax rates are changing rapidly globally. All countries are offering lower tax rates and incentives to attract investors. But this is balance by government which means that big companies pay a fair amount of tax, even if they try to move their money to places where taxes are lower. This way, everyone pays their fair share.
- The Role of Technology in Tax Management
The Impact of Tech on Tax Management Tech isn’t just changing tax systems. It’s also changing how companies handle their tax duties. Tax tech tools, like ERP systems and AI programs, let businesses do tax math, keep an eye on rules, and Look at tax info to make smart choices. Using these tools can cut down on mistakes free up time, and give useful ideas for tax planning. But to put them in place, you need to plan well, fit them with what you already use, and teach your team how to use them.
- Challenges and Opportunities
As the world of tax changes, it is a difficult situation for the companies but it also gives an opportunity to improve the situation further. The companies which are ready for the new tax world are those companies which invest money in technology and make rules according to it and according to these rules they come out ahead of other companies.
But along with this, companies will have to deal with some things like compliance cost, regulatory uncertainty and reputational risks.
Conclusion
Ultimately I conclude that our tax environment is changing very fast. There is a need to prepare all the businesses for this changed tax environment so that they can easily adapt to this changed tax environment. Tax reform creates a lot of opportunities in terms of advanced corporate taxes, tax benefits, and tax benefits regarding sustainability.
All organisations should be aware of the latest tax policies made by the government; they should be informed about all the policies. And the organisation should follow this policy to avoid losses and improve its tax strategy. By adopting all these government policies, organisations can minimise their tax impact and take advantage of it.
Author: Vanshika jain, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.
References
1. https://subnational.doingbusiness.org/en/data/exploretopics/paying-taxes/why-matters#:~:text=The%20amount%20of%20the%20tax,businesses%20and%20lower%20private%20investment.
2. https://www.alvarezandmarsal.com/insights/global-trends-digital-taxation-depth-look#:~:text=The%20rise%20of%20the%20digital,by%20highly%20digitalized%20business%20models.