Tax for board members - CFO’s journey from“staying out of trouble” to being “fully in control”
- Steef Huibregtse
- Dec 22, 2017
- 2 min read
By: e-bright
The world of taxation is changing rapidly. Prior to the Base Erosion and Profit Shifting (BEPS) initiative of the Organisation for Economic Cooperation and Development (OECD), non-disclosure by corporate was a realistic tool for dispute avoidance, facilitated by tolerant tax and transfer pricing (TP) regimes in multiple jurisdictions that did not require much more than some standard TP documentation and the company corporate income tax (CIT) return.
However, with the introduction of BEPS, TP compliance is no longer so straightforward. Multinational enterprises (MNEs) and small and medium sized enterprises (SMEs) alike are facing more and more challenges to produce Master File and country specific local files in a (growing) number of jurisdictions.
An exchange of these reports between multiple jurisdictions coupled with the emergence of programs such as International Compliance Assurance Program, where 7 countries (Australia, Canada, Italy, the Netherlands, Spain, the United Kingdom and the United States) are collaborating to develop a joint assessment mechanism, will provide the tax authorities ample ammunition to challenge taxpayers’ tax and transfer pricing structures.
In this uncertain environment, with most tax authorities adopting an aggressive approach towards corporate taxpayers – where “double/triple” tax on the same profit might become the new standard – it is also the reputation of the company and its management board at stake.
In short, with the introduction of BEPS, tax today goes hand-in-hand with:
Increased transparency
Increased reporting burdens
Tax obligations worldwide converge to a global standard and require more and more data to be made available to tax authorities
Tax risks overlap more with reputational risks
Increasing threat of tax audits
Threat of data being made public without having a chance to be prepared is higher than ever due to whistle blowers, LuxLeaks, Panama Papers, Paradise Papers etc.
6. Hence, it is becoming more and more important for a CFO to move away from a “staying out of trouble” attitude and adopt a proactive role in the journey towards full control. The following examples show cases in which a chief financial officer (CFO) only “stay out of trouble”
Download the full article:
Commentaires