BY Richard Summerfield
Global assets under management are expected to climb to around $102 trillion by 2020 according to a new report from PwC.
The report – Asset Management 2020 and beyond: Transforming your business for a new global tax world – notes that the boom in AUM is due to be caused by significant changes to global tax structures in the coming years. Furthermore, global tax functions, according to PwC, will be critical in determining those players in the market who will be best positioned to win a greater share of business over the next five years.
"In-house asset management tax teams will need to evolve to deal with perpetual audits and to engage with tax authorities on a frequent basis to influence policy and help guide the implementation of tax rules," PwC's William Taggart, Global Tax Leader, Asset Management said. "Asset managers will need to ensure highly-skilled tax people are brought into the heart of the business. The tone needs to be set at the top. The tax function is critical to the entire operation and senior management will need to make sure this is well understood," Mr Taggart added.
Asset managers, according to PwC will play a considerably different and significant role in investment businesses moving forward, this increased emphasis on asset managers will likely be caused by the retreat of banks and insurers from the investing space. Accordingly, PwC believe that a “new breed of global mega-managers will attract huge focus from tax authorities, which will have specialist teams with the capabilities to carry out much more detailed enquiries than in the past and the powers to request real-time investor-related information.”
Equally, tax transparency will be a key consideration by 2020 given that both the Common Reporting Standard (CRS) and global tax reporting will have become a reality.
By 2020, tax authorities would have specialist teams with the capabilities to carry out much more detailed enquiries than in the past, and the powers to request real-time investor-related information. To that end, in-house asset management tax teams will be required to evolve to deal with an expanded auditing program, they will also have to engage more regularly with tax authorities in order to influence policy.