Strategizing International Tax Best Practices – by Keith Brockman

Archive for July, 2015

IMF, World Bank: Support for developing countries

The World Bank and the IMF have released a new initiative to support tax systems in developing countries; a link to the press release is provided for reference.

http://www.imf.org/external/np/sec/pr/2015/pr15330.htm

Key observations:

  • World Bank Group President Jim Yong Kim’s statement: “If everyone pays their fair share – developing countries can close their financing gaps and promote inclusive growth.”
  • The IMF and World Bank will continue to collaborate with the OECD and other development partners in expanding tax assistance and expertise.
  • Two pillars of development:
    • International tax dialogue to increase their collective voice
    • Developing diagnostic tools to evaluate and strengthen tax policies

These developments will be a key metric to monitor, in view of the increased complexity and documentation demands in a post-BEPS era.

Multinationals may also view these developments as added impetus to be more proactive in engaging with tax authorities in developing countries to better understand their business, as well as provide expertise in the complex transfer pricing arena.

CTO Insights

KPMG has provided valuable ideas and observations in the June edition of its Chief Tax Officer (CTO) Insights publication.

Topics addressed in this edition include:

  1. Business Case for Tax Transformation
  2. OECD releases; BEPS impact
  3. Effective Communications
  4. Talent Management
  5. Shared Services Model

http://www.kpmg-institutes.com/content/dam/kpmg/taxwatch/pdf/2015/cto-insights-june-2015.pdf

Interesting questions:

  • How do you stay current with emerging trends in tax and governance?
  • Has BEPS changed your international  tax planning model?
  • Do you have a formal dashboard/scorecard to convey metrics?
  • How do you develop internal talent?
  • Has tax moved to a shared service/outsourced model?

These questions are provocative and inviting, as it leads to Best Practice thinking and implementation.  The publication is a valuable and welcome reference tool for CTO’s and other interested parties.

European Parliament’s resolution: Ambitious disclosure plan

The European Parliament, following its recent push for public disclosure (03 June 2015 post), passed a non-binding resolution by 550 votes to 57 to make this happen.

A copy of the press release is provided for reference:

http://www.europarl.europa.eu/news/en/news-room/content/20150703IPR73914/html/Tax-MEPs-advocate-country-by-country-reporting-to-help-developing-countries

Key observations:

  • Country-by-country tax reporting (CbCR) should be publicly disclosed to fight tax evasion and avoidance.
  • Perceived benefits of public disclosures include better tax justice and an end to tax havens.
  • All countries should adopt CbCR.
  • Company ownership should be in the public domain.
  • EU institutions should monitor actions by the Member States to determine ongoing funding decisions.

The EU continues to be a proactive force in introducing public disclosure changes, which will be a spark for all other countries to follow.  Accordingly, monitoring such activities will be a key to understanding future trends and disclosures that can be planned for currently.

 

 

UAE: Tax system on the horizon?

EY’s Alert provides an update on discussions being held in the UAE.

A corporate tax law has been drafted and a common value added tax (VAT) law framework for Gulf Cooperation Council (GCC) countries has also been drafted.  These discussions are now in an advanced stage, although implementation of a tax would take additional time to implement.

http://www.ey.com/Publication/vwLUAssets/Update_on_the_proposed_introduction_of_corporate_taxation_in_the_UAE/$FILE/2015G_CM5575_Update%20on%20the%20proposed%20introduction%20of%20corporate%20taxation%20in%20the%20UAE.pdf

In efforts to provide financial sustainability, this initiative should be closely followed to plan for the potential impact in the UAE and the Region.

 

Tax Function of the Future; Insights

PwC’s publication, referenced herein, provides revealing predictions and insights into the tax function of the future.

http://www.pwc.com/en_GX/gx/tax/publications/assets/pwc-tax-function-of-the-future.pdf

Key observations:

  • Reputation is being impacted by external perceptions, therefore companies need to respond clearly and succinctly to a wider stakeholder base.
  • A course must be charged for continual transformation.
  • Many jurisdictions will legislatively require adoption of a tax control framework, which will be shared with tax authorities.
  • Dedicated tax data hubs will become mainstream; data is the new business currency.
  • Most global tax compliance and reporting activities will be performed via shared service centers and/or third parties.
  • Tax professionals will require strategic risk management skills.

As post-BEPS time nears, with inherent complexities and global disparities, the time to examine current and ideal states of the tax function should be an immediate priority to avoid recurring reactive responses.

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