The future of indirect taxes to 2030

In today’s evolving world where technological advancements are reshaping every aspect of our lives, the landscape of indirect taxes is no exception.

From the rise of artificial intelligence (AI) to the proliferation of electronic invoicing (e-invoicing), these innovations are not only transforming how businesses operate but also how governments collect and manage taxes. As we look towards 2030, it's crucial for businesses, policymakers, and tax leaders to understand and adapt to these changes in order to navigate an increasingly complex tax environment.

The future of indirect taxes to 2030 explores the evolving nature of indirect taxes over the next decade. The report assesses past predictions, examines current trends, and offers new forecasts on how indirect taxes are expected to change in response to technological innovations and societal changes.

The report aims to provide insights into the future of indirect taxes, helping tax leaders better navigate the complexities, anticipate the challenges, identify opportunities, and stay ahead in the dynamic world of indirect taxes.

Ten indirect tax predictions to 2030

1. The tax base for a VAT does not need to change — it can handle the modern challenges of our economy

VAT's core principles, such as broad-based taxation, neutrality, and taxation where consumption occurs, are well-suited to address the evolving global economy and new business models.

2. The world is yet to find the right way to price carbon

Despite various carbon pricing instruments, challenges remain in effectively pricing carbon, necessitating more comprehensive and coordinated approaches.

3. Farewell to the corporate income tax — the world will move to a ‘model DST’

Digital Services Taxes (DST) are becoming increasingly relevant as an alternative to traditional corporate income taxes, especially in the digital economy.

4. Tariffs are among the worst of tax policies, and sadly they will proliferate

A resurgence of tariffs driven by geopolitical factors is expected, leading to significant economic consequences and a reshaping of global supply chains.

5. All taxes will benefit from e-invoicing, but e-invoicing is merely a transitory step in a longer-term journey; it’s not the ultimate destination

E-invoicing has transformative potential for tax compliance and administration, but it is just one step in a broader digital transformation journey.

6. Indirect taxes will not be governed by laws — they will be governed by systems

Future indirect taxes will be determined, declared, administered, and audited through advanced systems and technologies rather than traditional legal frameworks.

7. AI gives tax authorities virtually unlimited power. They could operate like a cartel and win the technology race, but they need to be wary of what they are creating right now

AI holds immense potential for tax administration, but ethical, legal, and privacy concerns must be addressed.

8. There should be a shift towards a technology-driven retail sales tax system

Technological advances could lead to a more efficient and effective retail sales tax system, reducing compliance burdens and improving tax collection.

9. The ideal form of indirect taxes is a more progressive VAT, which seems both easily achievable and yet elusive

A more progressive VAT system could address regressivity while leveraging technological advancements for real-time compensation.

10. Just as the digital economy is dominated by platforms, so too will the tax profession

The tax profession will undergo significant changes, driven by AI and other technologies, leading to a shift from knowledge-driven to 'know-how' driven roles.