June 3rd 2019: As members gathered in a darkly lit, private room at the prestigious Del Posto restaurant in New York, I was met with a sea of intrigue as to what the following discussion may ensue.

Hosted by Richard Hay of Stikeman Elliott and renowned for his specialism in international tax and regulatory affairs, the group soon delved into the topic, dissecting the tension between international tax and regulatory agencies.

So, what was discussed?

Globalisation has long been underway over the past 50 years and has recently entered the political sphere, with globalisation big in voters’ minds. What hasn’t been in the news is the tension between the IMF, EU and OECD, who are pursuing competing agendas. The ROW is also drawn in to this tension through BEPS.

Prior to 2008, by and large, countries opted to enforce each other’s criminal laws, but not tax laws. This soon changed overnight after the global financial crisis. When governments face revenue cuts, they can choose to hike rates or be a more stringent enforcer. In choosing the latter after the crisis, countries began helping one another s’ enforcement. However, the underlying issue was and still is that the tax system(s) is broken.

So, what does the future hold? The group considered what one worldwide system of taxation would look like and what would be the contingent building blocks necessary to create such a globally coordinated tax system:

1) Information exchange

2) Agreement on enforcement

3) Alignment in how systems operate

4) Agreement on tax rates

5) Someone to run the show; and

6) Simplified rules.

We then turned to the day-to-day impact of inter-agency tension on their clients and in particular, the impact of privacy. Much like a single tax system, should there also be a privacy standard for the world to agree on? Who can be trusted with client information in 2019? Is privacy dead?

The biggest concern for their clients is the safe keeping of their private information, in particular not allowing it to be misused by governments, countries, persons and systems, whose intentions all differ.

So what is the best advice to clients in this environment? Look to see what governments are trying to do in the long term. The nation states, for instance, are keen to preserve their existence. Combine this with the objectives of agencies and you are in a good place to predict the likely direction. Think about the macro-trends and this is what makes you a truly senior advisor.

In summary, those around the table did not overtly feel the “tension” between the tax and regulatory bodies around the globe on a day-to-day level. However, it has obviously impacted the increase of rules and regulations that they have to deal with, as the authorities battle and compete with one another.

This is an opportunity for private client lawyers and their demand in this field is at an all- time high. The knowledge pyramid is slowly narrowing – so to everyone reading, make the most of it.