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Endless new tax rules are putting growth at risk
First published in The Financial Times, 19 June 2015
Your report “Shell warns of trade threat posed by tax uncertainty” (June 16) is a clear reflection of the significant impact that the profound and unceasing changes to the international tax system are having on multinationals.
Simon Henry, Royal Dutch Shell’s chief financial officer, rightly points to the uncertainty that this constantly evolving environment is causing, not just for finance teams but for the overall strategy of multinational businesses and their ability to carry out investment and trade.
The rationale behind the OECD’s base erosion and profit shifting (BEPS) initiative is sound — providing clearer guidance on what is acceptable tax planning, at least from the perspective of governments, and levelling the playing field for all taxpayers is indeed desirable. If successful, these rules will undoubtedly make the life of the finance director a bit easier, but there is a real concern that the bar has been set too high and that reaching a consensus on international implementation is near impossible.
In addition, it is not just BEPS that multinationals are having to deal with. Tax authorities globally are becoming more aggressive, seemingly emboldened by developments such as BEPS, and tax disputes are growing in number and size and taking longer to resolve. As well, in the last few months across Europe we are hearing noises around the revival of both the Common Consolidated Corporate Tax Base (CCCTB) and the Financial Transaction Tax. The growing complexity and risk arising from this wave of new rules, and the uncertainty of their precise nature and timing, has a genuine risk of stalling global economic growth at a time when such growth is vitally important.
Mr Tim Wach, Global Managing Director of Taxand
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Multinationals are having more and more to contend with as public scrutiny on business activity continues, tax authorities are increasingly flexing their muscles and the outcomes of global initiatives like BEPS are pending.