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

Frédéric Donnedieu de Vabres, Chairman of Taxand, commented:

“Worldwide, we have seen political leaders speak at length about the taxation of multinationals, proposing sweeping change on a national and international level, from the transaction tax in Europe, to the OECD’s initiative around Base Erosion and Profit Shifting (BEPS), to retrospective tax litigation charges in parts of Asia. This uncertainty around tax is damaging multinationals’ confidence to invest and subsequently hindering the global recovery.

“Our annual survey shows that tax authorities have focused on the issues of substance and transfer pricing reforms in the last year.  Co-operation with other authorities around the world through data sharing and agreements, and the frequency of audits have increased. As governments and politicians have honed their focus on multinationals’ tax practices, dealing with the potential reputational risk arising from media and public scrutiny has remained a key issue for many companies. The need for multinationals to be confident in their tax planning has never been stronger.”

ABOUT TAXAND

Taxand provides high quality, integrated tax advice worldwide. Our tax professionals, more than 400 tax partners and over 2,000 tax advisors in nearly 50 countries – grasp both the fine points of tax and the broader strategic implications, helping you mitigate risk, manage your tax burden and drive the performance of your business.

We’re passionate about tax. We collaborate and share knowledge, capitalising on our expertise to provide you with high quality, tailored advice that helps relieve the pressures associated with making complex tax decisions.

We’re also independent—ensuring that you adhere both to best practice and to tax law and that we remain free from time-consuming audit-based conflict checks. This enables us to deliver practical advice, responsively.

Taxand has achieved worldwide market recognition. In the International Tax Review’s (ITR) World Tax 2014, 45 Taxand locations were commended and a further 26 locations listed in ITR’s World Transfer Pricing 2014. 29 countries were voted top in the ITR Transaction Tax Survey 2013 and 28 in ITR Tax Planning Survey 2013. Taxand has received 58 national awards and 12 regional awards in the ITR European, Americas and Asia Tax Awards since 2009. These include Latin America Tax Disputes Firm of the Year, European Private Equity Tax Firm of the Year, European Indirect Tax Firm of the Year, European Tax Policy Firm of the Year, Asia Transfer Pricing Firm of the Year, and Asia Tax Policy Firm of the Year.  Full details of awards can be viewed at www.taxand.com/about-us
 
For further information please contact:

Taxand
Abigail Tarren, COO                                            T. +44 (0)207715 5243      E. [email protected]

MHP Communications
Barnaby Fry/Simon Hockridge/Jade Neal             T. +44 (0)207357 9477       E. [email protected]