The complexity of major regulatory changes is starting to take a toll on globally active financial institutions. The greatest concern among organisations regarding tax compliance is the job of dealing with complex regulations in many different tax jurisdictions at once.

On the subject of recent tax changes which are about to force firms to change their tax data, a recent survey undertaken by SIX Financial highlighted IRS 871(m), IRS 305(c) and the automatic exchange of account data between countries' finance ministries engendered by the Common Reporting Standard (CRS). These are high hurdles for certain firms.

SIX’s findings also revealed that firms are not prepared to react to these rapid changes with the processes they have in place at the moment.

To the question "which of these recent tax regulations poses the greatest challenge for your organization?" 38.55 said FATCA; 30.8% cited existing and upcoming transaction tax schemes; 9% said the CRS; 9% said IRS 871(m); 1.3% said IRS 305(c); and 11.5% said 'other.'

The survey asked firms the question "What are your organisation’s overriding concerns regarding tax compliance?" SIX asked each respondent to select up to three options. The results showed that 55.1% of them were concerned about "managing the complexities of regulations in different tax jurisdictions and potentially overlapping regulations;" 38.5% had "overcoming data management challenges related to sourcing, managing and disseminating information" in their top 3; 29.5% listed the job of running adequate withholding and reporting processes; 26.9% thought that it was vital to give clients sound and accurate information about the tax implications of financial instruments before they made decisions about investments; 34.6% listed "tax operations - handling of reclaims"; and 6.4% listed 'other.'

Jürg Stalder, senior product manager at SIX said: “Tax regulations have changed immensely over the past few years and increased complexity around these new regulations have posed new challenges for organizations. Firms are under pressure to improve their tax data management processes and, with the speed at which regulation is evolving, it is unsurprising that our survey finds many underprepared.”

Automation is the goal for many organisations as a means to solve this problem. Nearly half agreed that the evolution of tax regulations has strengthened the case for automating processes and centralising information about tax data throughout their global operations. Only 22.4%, however, said that they had fully streamlined and automated processes.

110 financial institutions, most of them in the Americas, Europe, the Asia-Pacific region, responded to the survey in May 2018. They included global investment banks/broker-dealers, regional investment banks/broker-dealers, wealth management firms, asset management firms, custodians, interdealer brokers, hedge funds, private banks and retail banks.