Strategizing International Tax Best Practices – by Keith Brockman

Ernst & Young (EY) have published their 10th issue of T Magazine, highlighting the topics of tax risk and controversy.  The link is attached for reference:

http://taxinsights.ey.com/system-admin/editions/tmagazine10-2012-low.pdf

Key Highlights:

  • GAAR, Burden of proof: Taxpayer, Tax authority or Shared; summary of 24 countries.
  • Sustained government pressure on tax compliance means tax risk is now an issue for corporate boards, not just tax directors.
  • Clarity is now the key attribute in any message about tax that companies convey to the outside world.
  • As emerging markets become more confident and sophisticated, they are challenging commonly applied international tax standards.
  • The OECD’s “Tax Inspectors Without Borders” program (details in a prior post of 9 June 2013) seeks to match demand from countries wanting assistance with complex international tax audits with the supply of international tax experts.
  • Companies need to improve local knowledge of risk rating processes in each Asian country, including key focus areas and potential audit triggers.
  • Organizations need to show a willingness to engage with policymakers and administrators to improve policy proactively.
  • Tax authorities are increasingly adopting the OECD’s concept of the  “economic employer” to determine tax liabilities, rather than a treaty residence rule.
  • Creating a PE is the biggest tax risk companies face from sending employees on business or assignments overseas.
  • An increasing number of companies have appointed a head of tax controversy to manage tax risk and its implications.
  • Companies must be prepared to become more transparent.

Tax risk and transparency are the new challenges to be met by multinationals.  The T Magazine is a valuable resource in understanding today’s risks, and the manner in which these issues will transform current standards into leading Best Practices, tax risk policies and processes.

 

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