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Public Scrutiny of Tax Planning on the Rise
The past year has seen the rise of citizen activism as the economic crisis deepened and governments attempted to make up the shortfall in the public purse by hiking VAT rates, tightening legislation and enforcing retrospective taxes on businesses. The 'occupy' movement has focused attention on banks' tax contributions and added to the already increasing public scrutiny on the tax bills of multinationals. Our survey found that globally, 72% of respondents felt that public exposure to tax planning could be detrimental to a company's reputation, increasing from 53% in 2011.
Jaime Sol, Taxand Global Compensation Service Line Leader, commented:
"The increasing level of personal liability for company directors means that multinationals have again focused on ensuring tax planning is substantive. However, the threat of negative publicity surrounding tax payments, added to the growing criticism of directors' remuneration packages and multinationals' compensation tax, is higher than ever before."
Multinationals should not dismiss legitimate structures that work in the best interests of shareholders, but must only engage in purely commercially driven transactions and also be aware of retrospective legislation and how the company could be affected by tax structures in the future.
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