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Taxand surveyed CFOs and Tax Directors from across Europe, Asia and the Americas at its recent global conference in Frankfurt. The survey provided a view on the current tax landscape across the world and examined how multinational companies view the current pressures faced in light of increased tax transparency.
It is unsurprising that CFOs and Tax Directors are pausing for thought, or altering plans as we wait to find out the full extent and details of potential US tax changes. As we await more thorough proposals, US multinationals are somewhat scrambling in the dark, and are rightly concerned about potential impacts from what may prove to be dramatic tax reform, if Republican plans for a border adjusted cash flow tax are pursued, or if the much less ambitious Trump proposals are pursued.
The poll also found that over two thirds (69%) believe that tax auditors have been more aggressive in their activities in the last year. A quarter (25%) said there had been no change and just 6% said auditors had been less aggressive. This is compared to 77% who said last year they had seen an increase in audits, and 60% in 2015.
When asked about the impact of increased tax transparency, 88% of CFOs and tax directors said they were concerned about the potential exposure of the information provided to meet the proposed country-by-country reporting standards, down from 91% last year. In comparison, just 12% said they weren’t concerned. In addition, 96% respondents said they believed increasing global tax transparency will increase the cost of compliance, up from 89% last year.
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Taxpayers are under regular and increasing scrutiny to provide greater financial information to tax authorities. Countries across the globe are embracing various new methods of enhancing transparency and facilitating the exchange of information which brings significant challenges for multinationals to ensure they remain compliant. Our survey highlights how tax authorities have ramped up their information requirements and requests as tax planning comes increasingly under the spotlight. The reputational impacts of increased transparency clearly can’t be ignored. Public scrutiny can have significant reputational risk for corporates that fail to respond robustly to questions over their tax affairs. Firms must ensure, when deciding their tax policy, that they are willing to stand behind any decision.