2 Net change is the difference between more important and less important responses. The pandemic has accelerated the exploitation of the digital economy and made changes to country taxing rights to deal with digitisation and consumer-facing brands even more pressing. DAC 6 at its simplest creates a common reporting system under which, in the context of all taxes levied in the EU other than VAT, customs duties and excises duties, EU based intermediaries must report to their home state where they assist others to engage in cross-border arrangements which bear certain hallmarks. To capture the opportunities, its critical to understand what, when and how key technologies will impact your strategic ambitions in the coming years. But only two nations are currently meeting their Paris Agreement targets. *Note that some documents may not be available to all Gartner clients. Governments have set ambitious climate agendas, with commitments to create policies, regulations and incentives to accelerate decarbonisation. In addition, heightened stakeholder expectations could magnify reputational risks for companies. Vaccine nationalism, export controls, restrictions on cross-border people movement and the domestic political consequences of the pandemicwill create political risks in markets around the world. Global political risk hit a multi-year high in 2020 and is set to persist in the year ahead. Three key accelerators, when leveraged in addressing the six challenges, can help governments achieve a stronger, more resilient and more inclusive society for their citizens. Businesses may also need to revisit their TP arrangements if the way they conduct business has changed as a result of the pandemic. Such coordination should also help foster greater agility and flexibility in company operations another capability sharpened by the pandemic. In addition, climate change can instigate innovation, inspire new products and services that are genuinely less carbon-intensive or which enable carbon reduction by others. Trust in government. 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The question of whether artificial intelligence (AI) systems can own and transfer patent rights under UK law is to be considered by the UK Supreme Court. Addressing unemployment and spurring economic recovery will rely in part on adult reskilling programmes, including digital upskilling. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Protests are likely to pose a risk of disruptions to business operations. Based in London, he is a partner with PwC UK. While the specific geostrategy considerations differ for each, there are five overarching actions leaders should take to manage political risk in the year ahead: Include political risks as part of your companys risk register or other risk identification processes and then dynamically monitor them throughout the year. The government has appointed a panel of experts to look at the case for reform of the judicial review process. However, note that climate change also offers business opportunities for willing businesses. Global Clients and Industries Leader, PwC United Kingdom. Also note that companies can bolster the resilience of their supply chains, for instance by lessening their dependence on price-volatile fossil fuels and by moving towards renewable energy. The pandemic has become a political-risk event on a global scale in addition to being a public-health crisis. significant trends in regulatory and policy changes. In recent times, climate change has jumped from being a background social factor to a major political issue. Extreme weather-related events, including hurricanes, wildfires, floods and heatwaves, were prolific in 2020. This is based on an article by Jason Collins and Catherine Robins, tax experts at Pinsent Masons, the law firm behind Out-Law, which was published in Tax Journal on 8 January 2021. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. It is intriguing to reflect on text written at the end of 2020 that speculated on key trends and patterns for the UK economy for 2021. There are sure to be many cases where, unbeknown to senior management, employees have been working whilst on furlough, whether as a result of an instruction from their line manager or because they think they are helping their employer. Many large businesses expressed relief that HMRC has deferred proposals for requiring large businesses to notify HMRC of uncertain tax positions until April 2022. Geostrategic priorities to manage these risks. A recent report published by the International Labour Organisation (ILO) suggests even higher estimates of modern slavery than previous studies. The rules essentially shift the responsibility for observing the rules to the engager (if a medium or large business), as happened first for public sector engagers. Seismic change does not happen overnight, but ignoring a disruption in its early stages typically makes the entry price higher later. Vaccine nationalism, export controls, restrictions on cross These include: Governments can raise or lower corporation tax. Negotiations are ongoing as to whether credits from one system can be used in the other. HMRC raid activity has, naturally, been hampered by the lockdown restrictions so we expect to see an uptick in raid activity as and when such restrictions are lifted. So have political events, including rallies and protests. Trust in governments rose at the beginning of the COVID-19 pandemic, but through the course of the response, governments have come to be perceived as the least ethical and least competent stakeholder, according to the 2021 Edelman Trust Barometer. The political and legal environment in a region is based on government, public opinion, and consumer advocacy groups. Also note that the government can introduce new health and safety legislation and this will entail that a business may have to change the way it works, for instance by training its staff or upgrading its machinery or safety equipment. There is a good reason for this: a report by the Economic Policy Institute estimates that such investments are an economic multiplier, with each US$100bn put into infrastructure yielding as many as 1m full-time jobs, in addition to the benefit of the infrastructure itself. In stable, prosperous times Christmas parties and second jobs can be ridden out as exceptions to a general rule of competence; but when a pattern of controversy plays out against a background of hardship, the accusation of hypocrisy bites hard. Much turns on the extent to which the coronavirus vaccine roll out and new Trade and Cooperation Agreement (TCA) delivers an economic boost and whether that comes quickly enough for the Budget on 3 March to be used for tax-raising. Also, note that any slight increase in VAT will warrant that consumers pay more for the goods and services this tax is charged on. Government leaders must also determine how higher education should be financed if the shift to virtual learning continues. ET Political factors involve the decisions and laws that governments make. Many governments are incorporating infrastructure into their economic stimulus packages. \n Thank you for your patience. Gartner Terms of Use 1. In education, for example, Estonia, which has the top-ranked school system in Europe, had a mature digital component prior to COVID-19 and was able to move seamlessly to a remote-learning environment. The insights and services we provide help to create long-term value for clients, people and society, and to build trust in the capital markets. Despite international efforts at debt relief, debt resolution is likely to be complicated by COVID-19 and geopolitical dynamics. These changes can be economic, legal, or social and can include the following factors: In a referendum on 23 June 2016, the UK electorate voted to leave the EU. The UKs financial services sector must help regulators spot developing financial crime threats as the cost-of-living crisis starts to bite, according to one legal expert. Change language and content customisation. Sign-up to follow topics, sectors, people and also have the option to receive a weekly update of lastest news across your areas of interest. This serves as a warning for Heads of Tax to be sure of their facts before making any submissions to HMRC because if the facts are later found to differ from those presented, HMRC will want to know whether that was purely accidental, careless or knowing. The survey receives around 3,000 responses a month. Birmingham B15 2TT These legislations are designed to keep everyone safe, buttressing the need for safety procedures and ensuring there are consequences for those that are not following these health and safety regulations. We are processing your request. WebOther factors will include tax implications, industry regulations and global trade agreements and restrictions. Pandemics are inherently geopolitical, involving issues such as national security, global leadership, and international cooperation and competition. Privacy Policy. Separately, the government is also looking at making it harder to obtain permission to appeal from the Upper Tribunal to the Court of Appeal. More than 91% of the worlds population has been under some form of lockdown and border restriction since the onset of the pandemic. Failure to reevaluate these fundamentals will exhaust already taxed employees and make them less willing and able to stay engaged, while being productive through this crisis and the next. The call for evidence closes on 3 March 2021, which means we will have to wait to see if this is likely to turn into a full-blown change in tax policy. Some of the cookies that we use are provided by third parties. These include skill shortages and hard-to-fill vacancies, energy price inflation and It is important to remember that there will be more pandemics. As these cases come to light, it will be important that employers make a full disclosure to HMRC and repay any amounts overclaimed as soon as possible. The incoming Biden administration will realign US policy in 2021. The political has huge effect on the business. Business leaders are now under pressure from customers, investors, regulators and employees to do more on environmental sustainability, and having a sustainable business is seen as an opportunity to drive efficiency and revenue growth. Emerging technologies will have a large, disruptive effect in the coming decade. Download the eBook on Gartner Top Strategic Technology Trends and see when and how these 10 trends will drive strategic impact in 2023 and beyond. Geopolitical dynamics in the Indo-Pacific. Americans are currently feeling the effects of the highest inflation in 40 years, with prices on both essential and non-essential items rising across the board. Most educators have worked tirelessly to deliver remote learning to students, but resources have been limited and results have been mixed. 10 min. Prime Ministers room for manoeuvre declines over time like the space around a flooding island. This will be especially important in 2021, given the high levels of political and policy uncertainty generated by COVID-19. If transformation needs to be bold, do banks have the right tools for success? Please refine your filters to display data. Global Clients and Industries Leader, Partner, PwC United Kingdom. Governments must take time to assess the sentiment of all stakeholders, including all citizens, businesses, partner countries and the global community. ECONOMIC: Economic factors will include exchange rates, economic The UK has challenged the decision before the EU courts but is still obliged to recover the state aid notwithstanding this litigation. However, this was not possible: partly as a result of intransigence of the US, which sees the measures as unfairly targeting US owned technology companies; and partly as a result of the pandemic. From atoms to astronomy, computers to cars and robots to robust materials, our goal is to transform our understanding of the world to make life easier, healthier and more sustainable. This level of support, however, has come at a cost of ballooning government debt. Environmental issues came in ninth, with 9% of respondents citing it as a top-three priority. Choices and preferences also vary with Geopolitics in the Indo-Pacific will likely be even more volatile in 2021 as the major and middle powers become more assertive in shaping geopolitics while balancing between the US and China. Prioritise solutions that promote equality. A decade-long boom, generated substantially from inexpensive finance and lower-cost energy, led to structural stresses such as highly leveraged debt, crumbling international alliances and bubble-like asset prices. 4. A famous world leader once proclaimed that one should never waste a good crisisa philosophy many governments have embraced in 2021. 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