Why organisations, tax bodies should prepare for future of work

The world is moving away from mechanistic and industrial models. [Courtesy]

The world is going through transformation driven by digitisation, innovation, climate change and cultural changes. Some have referred to it as a VUCA world (Volatility, Uncertainty Complexity and Ambiguity) based on the leadership theories of Warren Bennis and Burt Nanus. It,

It is characterised by constant, unpredictable changes that have become the norm across industries and other facets of life.

This calls for agile and flexible management and leadership in the public and private sectors.

The world is moving away from mechanistic and industrial models.

In its place, a fluid, human, and digital future is taking shape forcing organisations and employees to adapt. Organisations must build structures that allow them to pursue growth and autonomy at work.

Alternative approaches to work have emerged which require a different way of working - forcing organisations to re-evaluate their jobs. These include artificial intelligence, automation and the gig economy.

Employees are also required to upskill, reskill or out skill to be able to meet the needs of agile organisations.

Automation is substituting, augmenting or transforming some exclusive duties and roles of employees and data will remain a critical asset to modern organisations.

It is the new oil in the 21st century with digitisation and interconnectedness leading to growth in structured and unstructured data.

However, taxes remain a critical source of public revenue.

Revenue agencies ought to remain alive to changes in the future of work that are likely to cut tax revenue collections or shift the tax base.

During the EY Annual Tax Summit, 2021 in October, panelists said Covid-19 had led to a review of their staff mobility approach.

It was noted that the movement of employees from one country to another reduced during the period. The Kenya Revenue Authority (KRA) collected Sh362.08 billion in Pay As You Earn (PAYE) in 2020/21 compared to Sh399.2 billion collected in 2019/20.

Multinationals have embarked on transformation projects including automation and restructuring their operations by outsourcing their non-core services - leading to loss of jobs.

These are likely to lead to a decline in PAYE as more tasks are automated and businesses move some of their functions to other jurisdictions.

The emergence of the gig economy will allow locals to provide their services to organisations globally.

These changes require organisations and revenue bodies to monitor the shift in the future of work and align their expectations and strategies.

-The writer is a Senior Tax Manager at EY. The views expressed herein are not necessarily those of EY.

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