Strategizing Multinational Tax Risks

http://www.pwc.com/gx/en/tax/indirect-taxes/shifting-balance.jhtml

PwC has recently published this report highlighting new challenges and forward looking insights for indirect taxes.  Detailed country summaries are presented for Brazil, Canada, China, China, Germany, India, Russia, Singapore, South Africa, United Kingdom, and the United States.  The article referenced at the end of the post highlights India’s intentions to introduce a GST.

VAT systems are present in more than 150 countries, with VAT receipts representing approx. 20% of total tax revenue in the OECD countries.  As VAT rates are increasing, tax bases are broadening, and EU joint audits with VAT are commencing, indirect taxes are requiring added focus for effective tax risk management.

The OECD’s Global Forum on VAT held its first meeting in November 2012, striving to increase collaboration and establish Best Practices in VAT administration and compliance.  The OECD International VAT/GST Guidelines will be finalized by year-end 2013, studying VAT neutrality, the destination principle for supply of services and intangibles, anti-abuse provisions, as well as enhancing mutual cooperation and dispute resolution mechanisms.

The report highlights Best Practice ideas, including the following:

• Identifying responsibility and awareness for indirect taxes, including environmental taxes
• Drafting contracts with provisions for new VAT/GST consequences in different jurisdictions
• Import and export risks and opportunities for logistic planning
• Risk awareness for indirect tax consequences
• Reviewing refund opportunities based on case law precedents
• Developing a methodology for reviewing and testing VAT characterizations and rate changes
• Inclusion of indirect taxes as an integral component of the global tax strategy and Tax Risk Framework

Related articles

• CII calls for rapid action on GST (news.in.msn.com)