Article 50. The divorce bill. A comprehensive FTA. Rights of UK nationals in the UK. Hard and soft exits. Exit implementation. Fishing rights….Do your eyes glaze over when you read the latest update on the Brexit negotiations?
If that’s the case, you’re hardly alone. Keeping tabs on how these multi-faceted negotiations progress can make one long for the comparative tranquility of good old-fashioned tax complexity. Of course, tuning out Brexit issues altogether comes with risks, especially from a tax management perspective.
“The UK’s withdrawal from the EU could have material tax implications for companies, according to a new PwC report, ‘Overseeing Taxes in a New Era,’” written for board members with tax oversight responsibilities. One of those many impacts will be to supply chain management. UK-based companies will no longer enjoy the intra-EU model that greatly simplifies and streamlines many aspects of cross-border trade. PwC also offers a helpful timeline that can help you track key Brexit milestones.
Despite the numerous updates on Brexit negotiations that greet tax professionals each week (and, sometimes, every day), it is important for members of global tax functions to keep in mind that the ultimate outcome of discussions between the UK and EU will have potentially major impacts on global trade – and their company’s tax strategy. It will also be important for tax functions to be ready to pivot as needed once the final terms of the divorce and a new trading agreement are in place (or not) by October 2018, when negotiations are scheduled to end and ratification commences.
Although these negotiations feel drawn-out, their end result, and its impacts, could eventually unfold quite rapidly. It is also important to keep in mind that other global trade and taxation changes will likely occur at the same time. The longer-term Brexit finalization horizon may give business leaders the false sense that they will have more than enough time to address the final outcome and the significant changes it will require business processes and supporting technology – especially those within the tax function – to undergo.
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.