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Multinational companies caught in crossfire
First published in Law 360, 23 June 2015
Executives, particularly chief financial officers, of multinational enterprises (MNEs) are finding themselves increasingly in difficult positions on the tax front. The Taxand Global Survey 2015 found that 77% of respondents were of the view that the public exposure of corporate tax planning, if perceived as 'aggressive,' has a detrimental impact on corporate reputation.
The OECD and the G20 have indicated that “horizontal tax equity,” or ensuring that similarly situated businesses are taxed in a similar manner, was one of the impetuses behind their ambitious base erosion and profit shifting (BEPS). To say that the impetus behind BEPS is solely a desire to “level the playing field” would be an oversimplification as the BEPS initiatives are also driven by governmental concerns about protecting their revenue bases and discouraging the spread of what they consider to be corrosive behaviour.
Unfortunately, it’s not only the impact of the BEPS actions that are keeping CFOs up at night. They have also indicated that the amounts in issue, and the time to resolve matters, are increasing. This includes cross-border issues requiring “mutual agreement procedures” between the tax authorities of different countries, which are seemingly taking longer to resolve.
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