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The Allure of Harmonisation

The Allure of Harmonisation
30 Jul 2012

Whilst harmonisation is desirable, multinationals seem unsure that it is achievable. The reality of harmonisation means governments feel measures would hinder their ability to fight for the affections of multinationals, their cash piles and the economic growth they bring.

In Asia only 55% believe it could be implemented. In the Americas 71% say it is not achievable. In Europe, the most harmonised of the three regions, 71% say it can be done despite the evidence to the contrary: both the Financial Transaction Tax, mooted as the saviour to Europe's deficits, and the CCCTB, which seeks to simplify tax, have been perceived as threats to countries' competitiveness. The reality of harmonisation means governments feel measures would hinder their ability to fight for the affections of multinationals, their cash piles and the economic growth they bring.


Mukesh Butani, Head of Taxand Asia, notes that:
"Multinationals want the simplification that harmonisation offers, they want to reduce their costs and they want certainty, a certainty they thought they could rely on in the developed markets, which has now evaporated. Greater harmonisation is key in some emerging markets in Asia, particularly if we are to attract future investment, but businesses must be careful what they wish for as taxes that are dressed up as harmonisation could lead to a greater tax burden or even double taxation when the detail emerges."

Whilst bold attempts at harmonisation are yet to come to fruition, multinationals should beware of the political will to foster information exchange and increase revenues and the inevitable compliance burden this will bring.

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