A global tax [ r ] Evolution The changing world of tax
Albert Baker, FCPA, FCA Deloitte Global Leader Tax Policy
Recent years have witnessed considerable public anger over apparently low tax bills paid by certain companies. As a result the OECD plan was drawn up to tackle this perceived tax avoidance by multinationals( Base Erosion and Profit Shifting(“ BEPS”)). Existing principles of international taxation were designed before the globalization of business and the digital economy. Policy makers are now recognizing these wider issues, and recognize that maintaining the status quo is not an option.
Tax is no longer something limited to business and tax authority relationships— it has become a significant strategic business issue, and there are also growing demands for tax information from many non-traditional sources.
The issue of tax transparency continues to be part of the global political and media agenda. It is too early to assess the impact of all the changes in the marketplace; however it is highly likely that most multinationals will be affected. Identifying risks and opportunities that current developments bring is critical and requires regular monitoring and review of an organization’ s position and options. As the strategic goals and operations of a business change over time, so should the tax strategies adopted to support them.
As part of this global tax [ r ] Evolution, there is a perception multinational businesses are not paying their fair share of taxes. Responsible tax( e. g. reputational risk) is now an important component of international tax matters. There are three components to this [ r ] Evolution: the administration of tax laws and treaties by jurisdictions( we see a growing number of instances of potential double tax where more than one country is seeking to tax the same income); unilateral tax law and treaty changes( we see a growing list of countries that are enacting or proposing uncoordinated legislative changes to protect their tax base, which can lead to double tax situations); and the OECD BEPS project.
A survey
The purpose of Deloitte’ s“ Base Erosion and Profit Shifting( BEPS) & Responsible Tax survey,” completed in March 2014, was to gauge contacts’ views regarding the increased media, political and activist group interest in“ responsible tax” and BEPS, and the resulting impact on their organizations. Nearly 600 Deloitte contacts responded to the survey.