Taxand Global Survey 2016 - Another year of global tax turmoil
Taxand today releases its 5th annual global survey, which shows that 77% of tax directors and CFOs at multinational companies have seen a year on year increase in the number of tax audits – up from 60% in 2015.
Taxand surveyed CFOs, tax and finance directors across Europe, Asia and the Americas as part of its annual global survey to understand the current tax landscape across the world and how multinational companies are currently interacting with rapidly changing legislation and more focused tax authorities.
The research found that 91% of respondents said they feel exposure to the public of tax planning activities, through the media, has a detrimental impact on a company’s reputation – an increase from just over half five years ago (2011: 51% and 2015: 77%). In addition, 75% said they were concerned about the potential exposure of tax planning information needed to meet the OECD’s BEPS initiative regulations on country by country reporting standards.
When looking at the approach companies take to tax planning, 76% of CFOs and Tax Directors said that tax is a top issue on their board’s agenda with nearly a third of respondents stating that increasing tax scrutiny had made them change their corporate growth strategy in specific countries.
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In recent years the heat on multinationals and their tax policies has been turned up and up as a result of a growing belief amongst the general public that multinationals are not paying enough tax and should be punished. The result has been an increasing pressure on tax policy makers and tax administrators around the globe to raise the number of measures directed against tax evasion and perceived “aggressive” tax planning or any planning at all, and so a rise in aggressive audits faced by the CFOs and Tax Directors of businesses across the world.
However, what would have previously been private collaboration with tax authorities, with both sides, taxpayer and tax administrator, seeking to find a reasonable solution, is now too often being played out in a very public forum. Tax authorities are increasingly using the media to highlight their efforts to crackdown on multinationals, fuelling the public belief that multinationals are some sort of evil empire hell bent on evading tax. This is simply not the case, as CFOs seek to understand what is reasonable tax planning and to execute their fiduciary duty to their companies and their shareholders.
However, the furore is unlikely to calm down anytime soon and CFOs now need to firmly add reputational considerations to their tax affairs. Authorities will continue to push multinationals to disclose further information. Multinationals therefore need to ensure they have watertight policies and audit trails in place to quantify and qualify their actions to ensure they stand up to even the most aggressive scrutiny.