Tax Authorities Growing In Ferocity
This topic was discussed today at the Taxand global conference 2013 hosted by Alvarez & Marsal Taxand US in New York.
Frederic Donnedieu de Vabres, Chairman of Taxand, said:
"The number of media headlines focused on tax have been on the rise in recent years, as tax authorities - under instruction from governments with budgets under pressure - ramp up their challenges to the tax strategies put in place by multinationals. Conscious of competitiveness and the need to appear to be stimulating growth, governments have avoided any increase of tax rates, instead focusing on the tax take driven by their tax authorities.
As a result, we have seen a rise in the number of challenges from the authorities, coupled with an increase in the technical ferocity with which they are carried out. In a relatively short space of time, the range of issues that are called into question during tax audits has grown exponentially, leaving multinationals battling against an ever changing tide of compliance and assessment.
Tax authorities have re-doubled efforts, on a risk assessed basis, to focus in on activity that is most likely to bring tangible results. The ways in which these challenges are carried out are also constantly evolving, and multinationals can no longer afford to simply keep abreast of current legislation, but need to anticipate future changes to continue meeting their business's commercial objectives and remain fully compliant.
Robert N Lowe, CEO, Alvarez & Marsal Taxand US, said:
"Tax authorities around the world are increasing their enforcement of transfer pricing. They see this activity as necessary to combat the ever-increasing efforts by multinationals to reduce their global tax rates through effective tax planning and positioning parts of their business in low tax jurisdictions."
This article is based on the Tax Controversy: Building a Watertight Defense Plenary session at the Taxand Global Conference 2013: view the plenary film and presentation here.
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"This increasingly aggressive approach points to the need for tax risk management to be embedded into corporate governance at Board level in order to protect shareholder value. For multinationals, a careful balance of central and local tax management is essential so that local compliance fits into an over-arching strategy for the Group as a whole."