Managing Boards of companies with international operations will find that tax is now an item on their agenda, since
BEPS has enhanced the corporate information on taxes accessible by tax authorities, placing companies at a higher risk of disputes and potential double (or even triple or quadruple) taxation
Additionally, the post-BEPS environment is making governments file personal liability claims against multinationals’ representatives/advisors AND
BEPS is often triggering a significant reputational impact as well. Based on the reaction of tax authorities seen today, a wilful/fraudulent BEPS outcome could easily lead to a few years behind bars.
Boards and audit committees are therefore recommended to:
Take a structured approach to their global tax risk management;
Have a written version of their global value chain;
Make sure their storyboard on taxes is synchronized across countries;
Have a sound and implemented corporate governance policies in place for taxes;
Deal with personal liability issues upfront;
Agree on communication standards to all stakeholders.
More and more disputes are expected to be triggered by the way BEPS is working its way into local tax rules and regulations. Often BEPS concepts are applied to current open years by tax authorities, which could even include open years prior to BEPS. The absence of sound and functioning international dispute resolution mechanisms on tax matters raises the fear of double, triple and quadruple taxation of multinationals’ profits these days. The GTC team is available to multinationals as well as tax professionals, who may lack the deep knowledge on international tax controversy or simply do not have a local and regional expertise available on running such a complex process.
Professionals are recommended to:
Be fully trained on all international tax and BEPS related matters;
Be pro-active in their communication with their stakeholders on keeping ‘taxes under control’;
Discuss the status of implementation of corporate governance on tax with their stakeholders;
Take an active line of communication with stakeholders on ‘tax risks’, i.e. the approach of ‘hiding tax risks’ is not in line with today’s ‘best practices’;
Make pre-assessments of tax risks, before filing any tax documents and reports with tax authorities.
In a world shifting towards full transparency on tax matters, a key challenge, among others, for the tax authorities will be to determine how best to deploy their available audit resources. Along with the benefits of obtaining ‘tax information’ on an almost ‘real time’ basis, there are quite some controversial topics for the tax authorities to deal with, such as:
Can I apply BEPS reports on all open tax years, with the risk of applying BEPS norms with a retrospective impact?
How to rank these information flows coming my way in terms of collecting ‘objective evidence’on facts on which taxation takes place? AND
How do i maintain a certain level of international tax and BEPS expertise to facilitate a normalized communication with taxpayers on these complex matters?
Tax authorities are recommended to:
Understand a multinational’s business model;
Assess a taxpayer’s tax positions/issues in selecting ‘audit cases’;
Rank the ‘evidence based facts’ to facilitate communication with taxpayers based on arguments;
Facilitate the right of multinationals against unjust taxation, where the taxpayer’s conduct has demonstrated ‘good faith’ compliance with the tax rules and regulations.