Multinationals call for legal certainty and stability in view of the new tax measures
The annual global survey conducted by Taxand (the alliance of independent tax law firms of which Garrigues is a founding member) with finance officers at multinationals (CFOs) reveals that multinationals are calling for greater legal certainty and stability in view of the tax measures introduced by regulators and governments in recent years. A full 74% of the CFOs consulted believe that political debate on these potential new tax measures only causes uncertainty among business decision makers.
Public and media scrutiny of multinationals’ tax planning based on the alternatives available under countries’ tax legislation, the frequent changes in legislation in different countries, retroactive taxes or the introduction of new cross-border tax measures, such as the Financial Transaction Tax and the Action Plan on Base Erosion and Profit Shifting (BEPS), have created a climate of uncertainty. In addition, according to the report, the lack of legal certainty and stability is eroding the trust of those who have the capacity to revive the global economy.
Some of the key points emerging from the survey were as follows:
• 74% of respondents felt that, in the last year, their tax authority has been more focused on the economic and business substance of Groups’ corporate structures.
• 20% confirmed that transfer pricing has been the most challenging aspect of global taxation.
• 82% of respondents said that their tax authority had stepped up its co-operation with other tax authorities around the world over the past year.
• 73% of respondents have seen a rise in the frequency of tax audits as governments around the world continue to concentrate on searching for tax revenues.
• 78% of multinationals reported a rise in their compliance costs over the past year.
• 70% of respondents see corporate income tax on boards of directors’ agendas, with the year ahead promising to be as important as the last as legislative change is set to continue.
Garrigues Tax Department