Multinational Companies Facing a Decade of Increased Scrutiny on Cross-Border Transactions
Taxand, the world's largest independent global network of specialist tax advisors to multinational businesses, today warns multinational companies that they face a decade of increased scrutiny as tax authorities across the globe strive to claw back tax revenues to plug national debt black holes.
Taxand believes the days of inactive tax authorities, seen in the last boom as tax income reached all time highs, will firmly be resigned to history as companies involved in cross-border transactions will face renewed scrutiny and audits.
As tax revenues across the world declined during recession, tax authorities are under pressure to examine the transactions of more and more companies and are increasing the level of detail sought on key transactions to determine whether extra tax income can be gained. Details being sought by tax authorities include minutiae covering where and when decisions were made and by which Director, with demands for e-mail trails and tracing becoming more and more frequent.
A failure to understand the regulatory tax framework by multinationals facing an increasingly aggressive probe into corporate activity, could risk double taxation or the time and expense of an audit by tax authorities. Companies are therefore encouraged to look carefully at Advanced Pricing Agreements (APAs) as a way to plan ahead for their most complex transactions. By negotiating tax agreements for cross-border transactions in advance, the risk of undue corporate taxes can be mitigated. Where tax audit enquiries are already inevitable, companies can leverage Competent Authorities procedures (CAs) to limit the impact of a re-assessment by ensuring double taxation does not come into play.
Taxand today launches a global guide to Advance Pricing Agreements (APAs) and Competent Authority (CAs) procedures for multinationals, providing an at-a-glance view of the key legislation in place in major jurisdictions worldwide.
Antoine Glaze, Head of Transfer Pricing at Taxand, said:
"Multinationals are today staring at a decade of scrutiny, with cross-border transactions being seen as the low hanging fruit for tax authorities around the world. We encourage multinationals to consider using APAs to negotiate agreements with tax authorities in advance of their most complex transactions. Otherwise they risk, not only paying too much tax or worse still, double taxation, but also a time-consuming and potentially expensive audit down the line.
"Taxand's global guide is designed to help multinationals get a feel for the legislation in place surrounding APAs. It also covers CAs - Competent Authority procedures - so that, should a company's transfer pricing position be re-assessed, an understanding of the procedures in place which govern any repayments, is provided.
"Whilst these agreements are becoming more established in the developed world, the number of APAs carried out is still relatively low, meaning that a number of large companies are currently missing the opportunity to agree a flexible tax arrangement before a transaction takes place. Perhaps more worrying is the absence of APA legislation in certain jurisdictions, particularly emerging markets, where multinationals are potentially wasting large sums of money in complicated and time-consuming tax audit processes."
TAXAND's GLOBAL GUIDE TO APAs & CAs
Whether planning a complex transaction or reassessing a transfer pricing position, understanding Advance Pricing Arrangements and Competent Authority procedures is essential. Taxand's Global Guide to APAs and CAs provides an at-a-glance view of the key legislation in place by region. The guide is designed to inform multinationals' risk management strategic planning helping them save time and money, avoid audits and prevent double taxation.
Taxand is a global network of leading tax advisors from independent member firms in nearly 50 countries. Our tax professionals-more than 300 tax partners and 2,000 tax advisors-grasp both the fine points of tax and the broader strategic implications, helping our clients mitigate risk, manage their tax burden and drive the performance of their business.
We're passionate about tax. We collaborate and share knowledge, capitalising on our collective expertise to provide our clients with high quality, tailored advice that helps relieve the pressures associated with making complex tax decisions.
We're also independent-ensuring that our clients adhere both to best practice and to tax law and that we remain free from time-consuming audit-based conflict checks. This, coupled with the compact structure of our member firms, enables us to deliver practical advice, responsively.
Taxand has achieved worldwide market recognition across the board. In the International Tax Review's (ITR) World Tax 2010, over 95% of Taxand members were ranked top. Recently Taxand won Latin American Tax Firm of the year at the ITR's Americas Awards 2009 and was nominated for European Tax Firm of the Year, European Indirect Tax Firm of the Year and European M&A Tax Transaction of the Year. In total in 2009 Taxand has been shortlisted for 48 ITR awards. Taxand won the International Tax Review's (ITR) best newcomer awards for delivering best-in-class cross border advice throughout Europe, across the Americas and over Asia Pacific in 2008. Moreover, 31 member firms were voted top in the ITR tax transaction survey and 30 were ranked top in the ITR tax planning survey 2009.
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