Strategizing Multinational Tax Risks

Maintaining an up-to-date legal entity organization process / document is an important requirement for accurate and timely tax compliance and planning.  Best Practice ideas for consideration include the following:

Governance sign-off process for all changes of a legal entity, including:

• Stated capital
• Share premium (Additional paid-in capital)
• Authorized capital
• Officers / Directors
• Tax elections re: tax characterization
• Change in name or form of entity
• Trade names / DBA
• Restructurings / Mergers / Liquidations
• Articles of Incorporation or Association

Documentation backup supporting all changes during the life of a legal entity, including formation and dissolution

Assigned Legal Entity champion in the organization

Governance process re: authorized users (view/print/edit)

List of authorized users

Guidelines re: providing legal entity data to third parties, including audit requests

Providing updates with distribution on a real-time (electronic) basis

Master Legal Entity Chart, archiving prior versions as permanent files

Permanent file retention of relevant supporting documentation

Listing of nominee shareholders

Legal and tax characterization, if different

Developing legal entity approval and sign-off in a business recommendation, rather than a separate subsequent process

Most organizations have a process to govern legal entity changes and provide contemporaneous information, although all processes merit a creative review to gain additional efficiencies and Best Practices.