Tax Takes on Even More Strategic Importance

BEPS is boosting tax management to a Board-level concern.

That’s one of the major takeaways of a global BEPS survey conducted by Deloitte. The survey findings are based on responses from over 600 tax and finance managers and executives from multinational companies (MNCs).

Overall, survey respondents are expecting substantial changes and major impacts from BEPS requirements. Additionally, the survey report’s analysis indicates that MNCs “will need to more tightly integrate their tax strategies with their business operations and actively embrace programs to manage key issues (e.g., advance pricing agreements and dispute resolution mechanisms) where possible...”

Other key findings include:

• 93% of respondents believe the additional transfer pricing reporting requirements resulting from the OECD BEPS recommendations will substantially increase their corporate tax compliance burden;
• 68% believe the increase in the number of foreign permanent establishments resulting from the recommendations will also substantially increase the compliance burden;
• 53% of respondents have developed additional corporate policies and procedures as a reaction to the increased scrutiny related to corporate taxation, and 55% of respondents have changed the way they conduct tax planning for cross-border transactions as a result of proposed changes arising from the BEPS project; and
• more than 92% of respondents agree that tax structures are under greater scrutiny by tax administrations than a year ago. Irrespective of any actual legislative changes, 94% of respondents believe that tax authorities will increase tax audit assessments globally as a result of proposed BEPS initiatives.

Managing the increased level of complexity and transparency from BEPS extends beyond tax to the C-suite and has now become a Board-level concern. MNCs who are not currently aligned on their approach to tax compliance from a strategic perspective will soon be forced to do so or potentially risk their global reputation with tax authorities, non-governmental organization (NGOs), and the media.