Legal Alerts / 25 Feb 2014

Legal Alert – Taxand Global Survey 2014: Substance, Reform & Reputational Risk

Three Quarters of Multinational CFOs Experiencing Uncertainty Due to Political Debate Around New Tax Measures

The annual global survey of multinational CFOs conducted by Taxand, the world’s largest global organisation of tax advisors to multinational businesses, has shown that multinationals are suffering from increasingly confusing messages around tax legislation by regulators and governments worldwide. 74% said that regular political discussion around potential new tax measures is causing uncertainty amongst business decision makers.
 
Confusion dominates the global tax arena. Court cases, political and media scrutiny of multinationals’ tax planning, frequent amendments to legislation, retrospective taxes and the introduction of new cross border tax measures such as the Financial Transaction Tax and guidelines such as BEPs has led to an air of uncertainty. The absence of legislative stability and consistency is impacting the confidence of those with the power to fuel the global economy.

The Taxand Global Survey was conducted amongst multinational clients across Europe, the Americas and Asia, and also produced the following key findings:
 

Highlights

Tax planning in a hostile environment

  •  76% of our survey respondents said that the exposure in the media of corporate tax planning activity has a detrimental impact on a company’s reputation
  •  31% said that the intense media focus on tax planning had made them change their approach to tax planning
     

Substance

  • 74% of respondents felt that their tax authority has been more focused on substance in the last year
  • The transfer pricing witch hunt
  • 20% of respondents, the biggest proportion of responses by some margin,  confirmed transfer pricing as the most challenging aspect of global taxation
     

The impact of harmonisation

  • 82% of global respondents felt that their tax authority had been co-operating more with other tax authorities around the world over the past year
  • Less than half of multinational respondents felt a global profit split approach to tax reform is a realistic solution for corporate taxation
     

Scrutiny and the search for tax revenues

  • 73% of respondents are seeing a rise in the frequency of tax audits as governments across the globe continue to scramble for tax revenues
  • Looking beyond corporate tax revenues is also an acknowledged trend – VAT, for example, is becoming an increasingly pivotal revenue raiser for governments
  • 78% of multinationals have reported a rise in compliance costs over the past year
     

Tax remains high on board agendas 

  • 70% of respondents see corporate tax as on the board’s agenda, with the year ahead promising to be as important as the last with legislative change set to continue

Attorneys at law Borenius Ltd is Taxand Finland. As the sole Finnish member of the worldwide Taxand organization, we are also able to meet our clients’ needs globally. For further information about Taxand, please see www.taxand.com.
 

For additional information

Janne Juusela 
Jarno Mäkelä
Sanna Lindqvist

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