Strategizing Multinational Tax Risks

PwC has published the inaugural Asia Corporate Treasury Survey 2014, based on responses from 117 organisations across 7 countries in Asia.  The Report includes risk management approaches, treasury structures and various other treasury topics that revealed significant opportunities for Asian treasury centres to deliver strategic business benefits.  The Report highlights the necessity of tax and treasury collaboration in developing Best Practices due to the mutuality of objectives and complementary issues for which one function should not operate independent from the other.  A link to the Report is included for reference:

http://www.pwc.com/en_GX/gx/audit-services/corporate-treasury-solutions/assets/pwc-building-the-case-for-asia-corporate-treasury-fa.pdf

The Contents include the following topics:

• Deployment of treasury staff
• Core treasury activities in Asia
• Treasury function in Asia
• Key financial risks
• Risk approach
• Hedge accounting
• Bank relationships
• Type of debt used
• Funding management strategies
• Investment of excess cash
• Key cash management activities in Asia
• Cash centralisation
• Treasury technology
• Future changes to think about

The Report provides valuable insight into the rapidly growing Asian region and the complexities encountered in addressing Best Practice methodologies,

Every organization should periodically review the structure of tax and treasury due to their interwoven functions, as well as compare the risk drivers for each function.

Relevant Best Practice questions include the following examples:

• Are the tax risk framework and treasury risk framework integrated processes, or are such frameworks developed independently?
• Does tax and treasury share updates re: new debt instruments, OECD BEPS action plan, hybrid instruments, triggering foreign exchange risk proactively, etc.?
• Are training workshops / opportunities provided for the integrated functions, leading to a Best in Class methodology for both treasury and tax processes?
• What is the future vision for tax and treasury?
• Is the transfer pricing documentation for loans, pooling structures, etc., consistent with current treasury practices globally?
• What is the withholding tax certification process from a tax and treasury perspective?

The Report, and Best Practice observations, are valuable topics for internal discussion and benchmarking the combined processes with peer organizations.