Strategizing International Tax Best Practices – by Keith Brockman

Posts tagged ‘International taxation’

Global Transfer Pricing Requirements: PwC insightful resource

An informative and valuable reference is provided by PwC that offers country specific recent transfer pricing legislation, in addition to a link for a tax summary of that country.  A separate link is also provided to sign up for transfer pricing e-bulletins.  A transfer pricing article from the perspective of Ghana and Africa is also provided for reference.

http://www.pwc.com/gx/en/international-transfer-pricing/requirements.jhtml

Recent transfer pricing news, available by a selection of the relevant country, is always helpful in this ever-changing and challenging world.

OECD G20 Report & Best Practice Analogies

OECD’s report to the G20 leaders in St. Petersburg, Russia is attached for reference, consisting of a Progress Report to the G20 in Part I, and details of the OECD Base Erosion and Profit Shifting (BEPS) Action Plan and offshore tax evasion efforts in Part II.  This posting will capture some highlights from the report, and pose analogies for Best Practices in alignment with the OECD’s initiatives.  The report may be accessed at:

Click to access SG-report-G20-Leaders-StPetersburg.pdf

The Introduction provides commentary on “legal tax avoidance,” renewed demands for greater transparency, calling for all taxpayers to pay their fair share, and completion of a global model for automatic exchange of information by 2014.

Initiatives of the Global Forum on Transparency and Exchange of Information (the Global Forum) have resulted in 119  jurisdictions committed to standards of transparency and exchange of information.  Best Practices includes communicating  results of the Global Forum to global and regional tax teams, and business leaders, to ensure that global consistency of information is being provided to tax authorities.  

The Global Forum promotes exchange of information via a monitoring and peer review process.  The process includes Phase 1 reviews, examining a jurisdiction’s legal framework for exchange of information, and Phase 2 reviews that examine information exchange in practice.  How well does the exchange of information process work for Multinational Enterprises (MNEs)?  Is this report, with a schedule of subsequent discussions on its impact, automatically sent to all tax team members, or is each individual personally responsible for accessing, reading and comprehending the report, including Phase 1 and Phase 2 reviews?

Peer reviews result in recommendations for improvement, with all jurisdictions required to provide follow-up reports describing actions taken. Re: global audits, are recommendations for improvement provided during, and after, the audit, with action steps documented?

The Global Forum has organized four training seminars in 2012, and five training seminars this year, in addition to implementation toolkits.  Appendix 4 of Part 1 provides a listing of members and observers, inherently resulting in potential impacts for these proposals beyond the OECD member countries.  How many training forums and business tools have been provided by MNEs in the last two years to review the ongoing trend of global tax proposals?

Part 2 lists the 15 activities of the BEPS Action Plan to be addressed by all relevant stakeholders.  For analogy, has the MNE also listed those same activities, addressing potential impacts, risk quantifications and expected actions for each of the proposals, including a relevant timeline and accountability?  Are all international tax team members and business leaders aware of the BEPS Action Plan?

Automatic exchange of information is becoming the norm, versus the exception, for tax authorities around the world.  How are tax changes, audit queries, changes in tax laws, etc., communicated within the MNE enterprise quickly and efficiently?  Is  a tax newsletter communicated to the global business, addressing areas of focus and learning?

Annex 2 of the Progress Report outlines a model of multilateral automatic exchange of information designed to implement a step change in transparency.    This section is useful in addressing future legislative changes, draft model competent authority agreements, legal / confidentiality concerns, and legal bases for the exchange of information.  MNEs should track public comments and future changes of OECD member countries and observers to address these initiatives.

The highlights of the OECD G20 Report, and suggested comments for Best Practices, are meant to promote creative thought and reflection to effectively plan for the rapid evolution of change in the international tax arena.

Global Mobility & International Tax: Alignment for Best Practices

Attached for reference is an informative Global Mobility presentation, inclusive of tax risk components.

Apart from Permanent Establishment (PE) risk, among others, I want to focus on the integration of International Tax and Global Mobility, with the following thoughts:

  • Are the International Tax and Global Mobility functions aligned to address tax risks and opportunities?  Are there regular meetings, information sharing and discussions of strategies, risks and opportunities?
  • Are PE and related tax risks explained and discussed with Global Mobility in recurring training programs?
  • Are International Tax personnel familiar with legal vs. economic employer concepts and other related mobility risks?
  •  Should there be dotted line and/or direct reporting structures?
  • Are there red flags/alerts upon assignments/transfers of Regional/Global Sales personnel to ensure PE is not created?
  • Are the legal entities to which personnel are assigned in existence?
  • Should someone with international tax expertise be placed on the Global Mobility Team to minimize potential risks?
  • How is Global Mobility aware of new trends, risks and opportunities, especially re: international tax?
  • Is Secondment and utilization of Double Tax Treaty benefits aligned?
  • How are assignments to new markets executed?  Is International Tax involved in the beginning prior to execution?
  • Are there specific contacts in Legal, International Tax and Global Mobility to communicate potential issues?
  • Are there cross-functional training programs to highlight new issues, discuss risk gaps and Best Practices?

I welcome your ideas.

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