The impact of publishing tax practices on reputation remains an essential issue for multinational CFOs, according to global tax advisor group Taxand’s annual global survey 2015. Survey responders, multinational CFOs across Europe, the Americas, and Asia, said that such exposure of corporate tax planning can harm companies’ reputations. They also highlighted issues such as politics and public opinion, base erosion and profit shifting (BEPS), crossborder taxation, rising tax competition, and the fact that taxes are still a central point in their boards’ agendas.
“Our annual survey demonstrates that multinationals feel caught in the crossfire, as they prepare for the post-BEPS world. Companies have changed their corporate growth strategies due to increasing scrutiny and more than half have seen an increase in tax audits instigated by tax authorities in the past year,” said Frederic Donnedieu, chairman of Taxand.
When it comes to BEPS, the majority of multinationals said that global tax architecture reforms are welcomed and that the rising international tax transparency will boost the cost of compliance. About 76% of responders think that BEPS will help countries to be more competitive in terms of corporate tax rate, while 83% predict that there will be a rise in tax competition in the next five years.
The survey also finds that multinationals have notified more audits from tax authorities, during the past year.
“We are in an interesting environment at present where, while increasing competition between countries to attract investment is driving lower corporate tax rates, political leaders also remain anxious to maintain revenues. Often viewed as a popular target, this has culminated in the public naming and shaming of certain multinationals despite them remaining on the right side of the law,” said Mr Donnedieu.
The increasing trend of corporate inversion will lead to higher competition among tax regimes, the responders said. About 76% of them said that tax issues still remain a priority on their board agenda. “The survey also supports that tax authorities have continued to hone in on crossborder taxation issues such as transfer pricing and inversions,” said Mr Donnedieu.