Due to its sweeping nature, the OECD’s BEPS initiative is set to transform the global tax environment, raising a host of risk-laden questions: How onerous will compliance be? Will this unprecedented level of transparency increase an organization’s reputation risk? How will customs processes change? Will BEPS requirements alter the valuation of proposed mergers and acquisitions?
These types of questions are causing growing concern within tax functions, executive suites, and boardrooms of multinational enterprises (MNEs). Nancy Manzano, Director in the Chief Tax Office at Vertex, addressed this in a recent issue of CEO Insight. She emphasized that the most effective response to these questions (as well as those related to the intensifying tax compliance challenges), is “to formulate a clear BEPS strategy at the earliest opportunity.” Manzano also notes that tax expertise at global and local levels is necessary to develop a sound BEPS strategy.
Some MNEs are considering yet another step: publishing their tax risk strategy and code of conduct for compliance on their websites. This move represents a proactive effort to minimize reputational risks and forestall potential public criticism. “In so doing, the impact on tax footprints, as well as the risk of increased auditing and penalties, will be minimized,” Manzano said.
Posting a company’s tax risk strategy online seemed unnecessary just a few years ago, but that has changed as BEPS ushers in a new era of full disclosure — cementing tax management status as a Board-level concern. To read the CEO Insight article, click here.
Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.