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Taxand Global Survey 2012

Taxand Global Survey 2012
1 Jul 2012

Half of Multinational CFOs Believe Expansion Plans Have Been Curbed By Tax Measures

78% have seen an increase in the number of tax audits undertaken by tax authorities

The second global survey of multinational CFOs conducted by Taxand, the world's largest global organisation of tax advisors to multinational businesses, has shown that scrutiny and compliance demands are stalling the growth plans of corporates across the globe. Multinationals are facing an ever greater level of scrutiny globally, often experiencing pinpointed investigations, which are now likened to a rifle shot rather than a shot gun approach.

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The survey was conducted across Europe, the Americas and Asia, and also produced the following key findings:

Highlights

Increasing scrutiny slowing multinational growth:

  • Almost half (48%) of multinationals believe their expansion plans have been curbed by overzealous tax authorities
  • 78% have seen a continued increase in the number of tax audits undertaken by tax authorities
  • 76% agree that rising tax transparency and reporting measures have further increased the cost of compliance

The battle for multinational investment:

  • International tax, which includes all cross border activity and international tax incentives, is the largest growing concern for multinationals (up 5% year on year), amidst substantial inter-country competition for inward investment

Harmonisation: The double edged sword:

  • 75% of multinationals think global tax harmonisation is desirable, with 58% believing it's achievable in the next 5-10 years.

Multinationals say tax is not the answer to economic woes:

  • An overwhelming 76% of global respondents do not believe that economic turmoil can be resolved through tax policy
  • 63% have concerns over governments' ability to assist multinational companies amidst recession

Increasing pressure on tax resources:

  • Multinational tax resources are under stress as 6% more identify this as an issue, year-on-year
  • Transfer pricing remains the most challenging area of tax for multinationals, with 20% of CFOs pointing to this

The rise of citizen activism:

  • 72% of multinationals now feel that public exposure to tax planning could be detrimental to a company's reputation, significantly increasing from 53% in 2011

Increased dialogue between authorities and multinationals:

  • Multinationals see a marked improvement in their relationship with tax authorities over the last year, jumping from 61% in 2011 to 84% in 2012

Frederic Donnedieu de Vabres, Chairman of Taxand, commented:
"The global tax environment remains in a significant period of flux, presenting a number of sizeable challenges for multinationals. The tax policies of governments across the globe are still largely being driven by macro-economic issues which continue to cause fragility in country budgets. The reaction of governments to these deficits has had the dual effect of a scramble for tax revenues, but also an environment of escalating competition to ensure tax environments are attractive for inward investment.

"Our second survey demonstrates that whilst multinational CFOs are under pressure, with limited resources and rising compliance demands, there remains a growing trend towards greater transparency and harmonisation in tax matters, as corporates seek a more cooperative approach, amidst the rise of public scrutiny towards tax planning."

Access your full copy of the Taxand Global Survey 2012

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Your Taxand contact for further queries is:
Abigail Tarren, Global Operations Director
T. +44 (0)207715 5243
E. atarren@taxand.com

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