The Enterprise Risk Management (ERM) process should be a coordinated process envisioning a multinational’s tax risks around the world.
The evolution with BEPS, ongoing developments re: digital taxation, multilateral instruments (MLIs) becoming effective, permanent establishment (PE) changes, and countries enacting unilateral legislation inconsistent with international norms are some examples why international tax/transfer pricing should be among the top ten risks of most multinationals.
Legacy ERM procedures may not be as effective in the current tax world as they were recently. However, have multinationals really incorporated these changes into the ERM process re: uncertainty and risk management?
Members of the Board of Directors, responsible for ultimate risk, should also be asking this question as a reminder/refresher for the ERM process. Tax executives, knowledgeable of such risks, should also be proactive in this process to educate others about recent global changes that may impact their organization.
Questions and challenges for ERM should be developed as new tax legislation is becoming more complex and uncertain in countries around the world.