Tax advisory revenues globally have hit $20bn (£15.2bn), up by 8.6%, with the UK market set to grow faster than any other European country in 2019 with Brexit driving growth, according to analysis from Source Global Research
The consultancy calculates the global tax advisory market was $20.3bn in 2017, and has grown by $5bn in just three years (2014–2017).
The report predicts strong growth will continue, and says forecast growth of almost 11% in 2019 will increase the value of the global tax advisory market to $24.4bn by the end of the year.
Although the UK tax advisory market expanded at a slightly slower rate of 7% to $2.2bn in 2017, Source predicts growth will almost double to 13%, driven by demand for Brexit-related work.
The report found that the main global tax advisory services are business tax management ($9.27bn), transfer pricing ($5.18bn), and international tax ($1.58bn). The financial services sector is the largest sector for global tax work ($6.64bn), making up almost a third of the world’s tax advisory market in 2017.
The Source report also reveals that the firms controlling the largest share of the global tax advisory market are the Big Four, with an 87% market share. EY leads the pack with 35% of global revenues.
Fiona Czerniawska, director at Source Global Research, said: ‘With decisions about tax increasingly becoming enmeshed with wider business decisions, firms need to be able to provide multidisciplinary offerings that integrate tax decisions with other key areas such as risk and audit—and even business consulting services—putting the Big Four in a strong position with clients.
‘Deciding where to manufacture, hold intellectual property rights, or locate head office functions are all increasingly becoming as much of a tax decision as a business one. This illustrates why Brexit will lead to an increase in tax advisory work.’
The report identifies three major drivers of tax advisory work: an increasingly complex global tax landscape; convergence between tax and risk issues, particularly in relation to reputational risk; and a growing appetite for automation.
A recent Source Global Research survey of global finance professionals found that 82% thought that some of the work in the tax function would be automated in 10 years’ time.
Francesca Lagerberg, global leader tax services at Grant Thornton, said: ‘Everybody knows that machine learning through to full AI is going to change tax significantly.
‘However, governments are actually moving quicker on this than the private sector. The reason governments are going digital first is primarily financially driven as they cannot afford to run big revenue-collecting alternatives. Digital is cheaper, quicker, and - equally important - it can be more efficient.’
Report by Pat Sweet