Recently I was in Tokyo with the global leadership of our tax practice, and we were evaluating what’s been happening over the past 5 years. We know that governments are in deficits, that organisations haven’t been making the profits that they once were. And so in thinking about how tax systems will evolve over the next 20 to 30 years, we started to contemplate what's been going on at a global level.
Now we know that businesses have been globalising, and when I say globalising, that really focuses on the value chain. These value chains not created in country any more. They're being developed across countries, across regions, or on a global basis. And what this has done is cause governments to think about how the tax systems should be operating domestically, but also how they should fit together globally.
What our challenge is, is governments are going to work together over the next couple of years together with the OECD, and they’re going to think about how that tax system should really operate. And so we’re going to see more and more papers come out, both on a domestic basis, but also through the OECD, about the future of the various tax systems.
It means that we have to stay on top of what these developments are. We need to understand how profits are created in a particular country, what the capital risk is, how financing arrangements are put together, so that we can understand what the impact will be on the organisation - both in country but also on a regional and a global basis.
And that means that there is a fair bit of work to be done. But the starting point that we're seeing a number of organisations go after is actually to start to review their global structure and really understand how their operations work.
So I think this is a really interesting time for organisations, and governments in particular, to think about what is going to be that tax system that will support government over the next 50 years and really enable companies to flourish.