• Managing indirect tax in the digital age

    Multinational companies are handling large quantities of complex data about indirect taxes. We outline hands-on approaches that can help deal with all that information.

  • FATCA: Are you ready for 1 July?

    If you’re not prepared, you could suffer a 30% withholding tax on US-sourced payments. Know where you stand.

  • Budget 2014

    Read our analysis of Budget 2014, including Budget Alert, which gives insight on employment, personal, corporate and indirect tax measures, plus EY ITEM Club comment.

  • OECD provides update on the BEPS Action Plan

    On January 23, 2014, the Organization for Economic Cooperation and Development hosted a webcast on the base erosion and profit shifting project. Learn more.

  • Tax Policy and Controversy Briefing goes online

    The speed of change continues globally. Keep up-to-date on tax policy, legislative and regulatory developments with our new web-based Tax Policy and Controversy Briefing.

  • Tax Transparency

    The trust an organisation builds with its stakeholders is critical, and tax transparency is a key dimension in building that trust. Find out how we can help.

  • Indirect Tax Briefing: eighth edition

    Across the world, the shift from direct to indirect taxation continues. See which global indirect tax trends are transpiring right now.

  • Worldwide Cloud Computing Tax Guide (2013-2014)

    Our interactive country map will help you gain insights into the cloud computing corporate tax regimes across the globe.

  • 2013 Global Transfer Pricing Survey

    With transfer pricing issues under close scrutiny worldwide, here’s how companies are managing the risks.

Tax Services

We’ll help you navigate the global tax landscape

The business and tax landscapes have changed dramatically, and the pace and complexity of change continues to increase. We can help you navigate this shifting landscape. Governments are tempering the need for revenue with increased competition for labor and capital. Tax authorities are adapting their enforcement strategies, focus and policies in response to the changing dynamics of business. Companies are balancing competing priorities, ensuring they maintain compliance while adding value. We can assist you with these critical issues in today's tax environment, including:

  • Midweek Tax News


    A weekly update on tax matters to 22 April 2014

    Midweek Tax News provides you with a succinct overview of the key tax developments that have occurred each week, to allow you to stay up-to-date on tax issues that may have an impact on your business. If you would like to discuss an article in more detail, please do speak to the relevant contact listed at the end of this issue or to your usual EY contact.

    On 16 April, the OECD published the responses received to its public discussion draft on Action 1 of the BEPS Action Plan Tax challenges of the Digital Economy. The discussion draft is being discussed by delegates to the Task Force on the Digital Economy. A public consultation meeting on Action 1 is being held in Paris today, Wednesday 23 April. The consultation will be broadcast live on the internet.

    Separately, the OECD has confirmed that the public consultation on transfer pricing and country-by-country reporting (Action 13) will be held on 19 May and will also be broadcast live on the internet.

    We continue to be closely involved in discussions with the OECD and various tax authorities on these and other elements of the OECD Action Plan. If you would like to discuss any issues raised or feed comments into these discussions please speak to your usual EY contact.

    As a reminder, our next web seminar, on 29 April, will address the latest developments in respect of the OECD's BEPS Action Plan. The seminar will update you on how the Action Plan thinking has progressed with a particular focus on the three recently published discussion drafts in respect of:

    • Action 1: This focuses on identifying the main difficulties the digital economy poses for the application of existing tax rules and on the development of detailed options to address these difficulties.

    • Action 2: This Action calls for rules to neutralise the effect of hybrid instruments and entities.

    • Action 6: This looks to develop model treaty provisions and recommendations regarding the design of domestic rules to prevent the granting of treaty benefits in inappropriate circumstances.

    These discussion documents contain a wide range of detailed proposals intended for public comment over a very short timescale. In some, there is, as yet, no consensus on the way forward; but in others there are specific recommendations to consider. We will also look at some of the responses we are already seeing from governments and tax authorities and consider multinationals' response strategies.

    To register for our seminar please use this link.

    On 16 April 2014, the Department for Business, Innovation & Skills (BIS) issued its formal response to the comments received on its ‘transparency and trust’ discussion paper issued in July 2013 and set out its proposals which include the following:

    • A central registry of company beneficial ownership information, based on the existing definition of beneficial ownership as applied for anti-money laundering purposes. Beneficial owners will be required to inform the company of any changes to the information recorded, and it is intended to allow applications to the Registrar of Companies to protect beneficial ownership information from public disclosure only in ‘exceptional circumstances’.

    • The prohibition of the creation of new bearer shares, with a set period of time being provided for existing bearer shareholders to surrender their bearer share warrants

    • The prohibition of corporate directors, with ‘limited and specific’ exemptions where the use of corporate directors is deemed to be of higher value and lower risk

    • Improving the standard of information available to ensure directors understand their statutory duties and the potential for breaching them by acting as an ‘irresponsible front’, including legislation ‘as necessary’

    • Updating the directors' disqualification regime with a broader set of provisions setting out the factors which will be considered

    The Government has indicated that it will legislate where necessary as soon as Parliamentary time allows. While these proposals do not relate to tax directly they are interesting in the context of the debate on tax transparency and corporate governance more generally.

    HMRC has published guidance on one of the proposed anti-avoidance measures contained in Finance Bill 2014 that relates to the FCE (under which a full or partial exemption may be available in respect of an offshore company's non-trading finance profits for UK CFC purposes). The provision is intended to prevent groups from moving long term receivables which would otherwise be taxable in the UK into an offshore finance company and benefiting from the FCE.

    The guidance takes the form of a series of examples of financing transactions and is intended to provide HMRC's view of the application of the new rules to example fact patterns. Examples covered include:

    • refinancing the US using the FCE from another common financing strategy

    • the UK entering into a temporary loan to finance an acquisition which it later refinances through an offshore finance company

    • replacing a UK facility agreement with longer term loans from an overseas finance company

    HMRC notes that the tax analysis for a particular group will depend on the specific facts of the case and, given that the provision looks to the main purpose of the arrangements, the actual purpose of the relevant arrangements. It states that it is willing to give clearance on the application of this main purpose test although such clearance is likely to be limited to a risk indication. We have had a number of conversations with HMRC on these and other scenarios.

    In the case of UBS AG, the Court of Appeal has upheld the Upper Tribunal decision in favour of the taxpayer. In the joined case of DB Group Services, the Court also found in favour of the taxpayer, in that case reversing the judgment of the Upper Tribunal. Both cases involved the award of ‘restricted securities’, as part of a strategy to pay bonuses to employees. In both cases, the Court considered the legislative requirements of the restricted securities legislation and the ‘Ramsay’ implications of a tax avoidance motive to the bonus arrangements.

    HMRC argued that it was not the intention of the legislature to extend the benefit of the restricted securities provisions of Chapter 2 ITEPA 2003 to artificial arrangements, such as the scheme, that have no commercial purpose. Alternatively, HMRC argued that the forfeiture restrictions were commercially irrelevant provisions inserted solely for the purpose of achieving the intended tax avoidance.

    In looking at the UBS arrangements, the Court found that Chapter 2 contains a detailed and prescriptive code for dealing with restricted securities. It agreed that the shares were restricted securities whose taxation fate was governed by that code and rejected HMRC's submissions that the Ramsay principles, whether broad or narrow, require these genuine employment-related shares to be regarded other than as genuine restricted securities within the meaning of Chapter 2. Provided there was a real, genuine possibility of the stated circumstances for forfeiture occurring, the taxation of the shares in question was not affected by the fact that the inclusion of those circumstances in the arrangement was tax motivated.

    The Court took a similar view in considering the Ramsay arguments in the DB Group Services case. However, in that case, the Court was required to consider in more detail the questions of whether the scheme shares were restricted securities and, if so, whether the employees were entitled to the tax exemption provided by section 429 ITEPA.

    However, the First-tier Tribunal had found that the exemption was available but the Upper Tribunal had then taken the view that the First-tier Tribunal was in error in its findings on the section 429 control argument. The Court found that the Upper Tribunal were wrong to consider afresh whether DB Group Services had control of relevant voting powers such that the section 429 exemption was not available. That was a question of fact for the Fist-tier Tribunal and that Tribunal had given rational reasons for their answer to that question. Moreover, the Upper Tribunal's conclusion that the only answer to the control question was that DB Group Services had the relevant control was "obviously wrong".

    The cases are interesting given the Courts' rejection of HMRC's broad Ramsay arguments and their decision not to ignore elements of the overall arrangements simply because there was a tax avoidance motive.

    In Derrin Brother v HMRC the High Court rejected an application for judicial review concerning the use by HMRC of investigatory powers requiring, by notice, disclosure of documents by a number of banks and by a firm of UK accountants relating to their clients' affairs, following a request made by the Australian Tax Office (ATO) for assistance in accordance with the exchange of information procedure under Article 27 of the UK/Australia tax treaty. The ATO investigations indicated that a UK firm of accountants was providing nominee directors and shareholders to UK incorporated companies (being the claimants in this case) involved in arrangements allegedly designed to avoid tax in Australia. The Australian resident taxpayers had failed to provide documents under formal request accordingly the ATO wished to obtain that information from third parties in the UK.

    HMRC had received approval from the First-tier Tribunal to the giving of certain third party information and document notices under paragraph 2 Schedule 36 Finance Act 2008 following the ATO's request. The claimants had not received any reasons for HMRC's intended seizure and had no opportunity to submit written representations objecting to disclosure. They contended that this was unlawful. The Court was asked to consider two issues:

    • Whether on a proper interpretation of the provisions in Schedule 36 there was any breach of its requirements so as to invalidate the notices. The Court found there was no breach on the basis that: (i) there was no requirement under Schedule 36 to provide a summary of reasons to the claimants who were not named as taxpayers; and (ii) the notices were not drafted too broadly.

    • Whether the Tribunal acted in breach of the European Convention of Human Rights/Human Rights Act 1998 (right to a fair hearing; right to respect for private and family life; and protection of property). The Court found that it did not, as the notices were issued in accordance with the law in pursuit of a legitimate aim and were necessary in a democratic society for protecting the taxation system and the revenue. Against the background of a limited interference with their rights, the judicial review itself provided the claimants with an effective remedy.

    Scope of construction industry scheme (CIS): HMRC guidance

    On 15 April, HMRC published revised guidance confirming that it has changed the way it interprets the CIS provisions in Finance Act 2004 that identify which businesses are required to operate the CIS in respect of payments relating to their own properties. Businesses can be brought within the CIS regime in two ways through being either a ‘mainstream contractor’ or a ‘deemed contractor’. This new guidance relates only to the former.

    In 2011, following detailed representation from EY, amongst others, HMRC agreed a list of examples of businesses that were, in its view, no longer to be considered as mainstream (this included large manufacturing concerns, department stores, breweries, banks, oil companies and property investors). In its revised guidance, it now states that mainstream contractors are only those where construction is their main activity or is fundamental to the core purposes, namely builders and construction businesses. Accordingly payments made by businesses for construction work relating to their own business where construction is not the core activity, including utilities, telecommunications and transport networks and infrastructure and any others previously excluded, will not now be within the CIS as long as the property was not held as an investment, let or intended for sale.

    Deemed contractors (being businesses which do not include construction operations but whose average annual expenditure on construction operations over three years exceeds £1m) can, already, treat payments relating to their own property used for business purposes as outside the CIS as long as the property was not held as an investment, let or intended for sale.

    This guidance represents a welcome relaxation of HMRC's practice in this area.

    Office of Tax Simplification (OTS) letter to David Gauke MP

    On 15 April 2014, the OTS wrote to David Gauke, Exchequer Secretary to HM Treasury, in reply to his letter of 19 March 2014 setting out the Government's response to the various reviews currently being conducted by the OTS.

    In its letter, the OTS expressed disappointment that its recommendation to widen significantly the scope of PAYE settlement agreements has not been accepted, which it considers is at the top of employers' lists of changes that would simplify their payroll administration. Other points covered in the letter include an intention to research the international issues faced by partnerships, possible new simplification reviews of employment status, and penalties and trusts.

    The OTS also confirmed that it is giving thought to its own long-term future.

    The UK's tax treaty priorities

    HMRC has published its programme of work for the year to 31 March 2015, confirming that it plans to begin negotiations on double tax treaties and protocols with Colombia, Kyrgyzstan and Trinidad, among others.

    It also plans to take forward work on double tax treaties and protocols with Austria, Bulgaria, Canada, Croatia, India, Kosovo, Lesotho, Luxembourg, Malawi, Portugal, Russia, Senegal, Sweden, Tajikistan, Thailand, Turkmenistan and the US; and on tax information exchange agreements with several jurisdictions (though it did not name which).

    Taxation of ring fence gains

    In the case of Wintershall (E&P) Limited, the First-tier Tribunal has held that the term ‘adjusted ring fence profits’ includes chargeable gains for the purposes of the supplementary charge on UK/UK Continental Shelf oil and gas ring fence trades. The effect of the Tribunal's decision is that gains within the ring fence are subject to the supplementary charge.

    Section 330 CTA 2010 was amended in 2012, making it clear that ring fence gains are subject to the supplementary charge with effect from 6 December 2011. The decision in this case is not binding and may be the subject of appeal. However, if the judgment is followed, this will mean that ring fence gains for periods before 6 December 2011 are also within the scope of the supplementary charge.

    EU audit regulation

    On 14 April, the Council of Ministers formally approved an agreement on a revised directive and a new regulation on statutory audit. By way of reminder, the key proposals in the package include the following:

    • There are significant restrictions on the provision of non-audit services to public interest entity audit clients, including many tax and advisory services.

    • Auditors in the EU will be required to publish audit reports according to international auditing standards.

    • Public interest entities will be required to issue a call for tenders when selecting a new auditor.

    There will be a ‘mandatory rotation’ rule whereby an auditor may inspect a company's books for up to 10 years, which may be increased by 10 additional years if new tenders are issued, and by up to 14 additional years in the case of joint audits, ie, when an entity is being audited by more than one audit firm.

    The regulations are expected to take effect sometime in 2016.

    Publication of new OECD guidelines for the application of VAT to international trade

    At its Global Forum on VAT, which was held in Tokyo on 18 April, the OECD published a new set of guidelines for the application of VAT or GST (goods and services tax) to international trade. The guidelines seek to address the problems that arise from national VAT systems being applied in an uncoordinated way in the context of international trade. They set standards aimed at ensuring neutrality in cross-border trade and a more coherent taxation of business-to-business trade in services.

    French ‘anti-hybrid’ financing provisions

    The French tax administration has released draft regulations on the new ‘anti-hybrid’ financing provisions included in the 2014 Finance Bill. The draft regulations are open for public consultation until 30 April. Following this public consultation process, the draft regulations could be subject to some amendments before final guidelines are issued.

    Our international tax alert provides further detail regarding the draft regulations.

    European Commission request to the Netherlands regarding discriminatory taxation of dividends

    The Commission has requested the Netherlands to end the discriminatory taxation of dividends received on shares held by insurance companies established elsewhere in another Member State or in an EEA country. The request is in the form of a reasoned opinion setting out the Commission's view. In the absence of a satisfactory response within two months, the Commission may refer the Netherlands to the Court of Justice of the European Union.

    Other international tax alerts

    Please see links to a selection of our international tax alerts in respect of the following developments. Additional articles are available in our Global tax alert library.

    US: The 2015 Fiscal Year Budget, issued in March 2014, contains at least seven significant international tax proposals that would affect non-US multinational investors in the US. Two of these proposals are new: (i) a proposal to restrict deductions for excessive interest of members of financial reporting groups, which would effectively modify the section 163(j) earnings stripping rules; and (ii) a proposal to restrict the use of hybrid arrangements that create stateless income.

    Canada: This alert looks at how proposed ‘treaty shopping’ measures suggested in the February 2014 Federal Budget could affect private equity investments in Canadian real property.

    Australia:The Australian Taxation Office has released new draft guidelines which represent the its first documented view on how Australia's new transfer pricing laws will apply.

    Austria: The Austrian Administrative High Court recently issued two decisions addressing the definition of interest and deductible financing costs, and goodwill amortisation in the context of the EU principles of freedom of establishment and State Aid.

    Other publications

    The 2014 edition of our Worldwide VAT, GST and Sales Tax Guide is now available. This guide summarises the value added tax, goods and services tax and sales tax systems in 109 countries and the EU. With some variation, the chapters provide at-a-glance information, as well as details on the scope of the tax, persons liable, tax rates, time of supply, the recovery of the tax by taxable persons and non-established businesses, invoicing, and tax returns and payments. For EU Member States, we also provide information about Intrastat reports and EU Sales Lists.

    Please speak to your usual EY contact, or email us at eytaxnews@uk.ey.com, if you would like to receive a copy of our regular indirect tax newsletter, or information about our other publications.

    Further information

    If you would like to discuss any of the articles in this week's edition of Midweek Tax News, please contact the individuals listed below, Claire Hooper (+ 44 20 7951 2486), or your usual EY contact.

    OECD Base Erosion and Profit Shifting Action Plan update

    Email Claire Hooper

    + 44 20 7951 2486

    Tax Focus web seminar 29 April – OECD BEPS Action Plan: Treaty abuse, hybrids and the digital economy

    Email Claire Hooper

    + 44 20 7951 2486

    Register of company beneficial ownership

    Email Mandy Pachol

    + 44 20 7951 7092

    Controlled foreign companies finance company exemption

    Email Amber Mace

    + 44 20 7951 6154

    Court of Appeal considers award of restricted securities

    Email Mike Gibson

    + 44 20 7951 0568

    Use of HMRC investigatory powers to assist overseas tax authority

    Email Tom Passingham

    + 44 20 7951 2846

    For other queries or comments please email eytaxnews@uk.ey.com.

    Back to the top

  • Operating in a shifting tax landscape

    The global tax landscape continues to change in a dramatic fashion, with near-constant news hitting the headlines regarding shifting tax policy, increasing levels of enforcement and the growing potential of reputational risk.

    Competing priorities

    Multinational companies now have to balance more competing priorities than ever before, ensuring they protect their business by monitoring and responding to changes in policy, legislation and tax enforcement, while at the same time ensuring they not only maintain the highest levels of compliance but also add value from the tax function.

    Governments work to secure each tax dollar they're due

    From a policy perspective, all governments want their country to be viewed as an attractive place to do business, to attract jobs and capital in an increasingly competitive globalized arena.

    At the same time, they want to increase the amount of revenue they bring in. Governments are treading a fine line, constantly assessing how to secure the tax revenues they see as rightly theirs, while at the same time being in direct competition with other nations, making sure they do not scare off mobile capital.

    Tax administrations for their part are adapting their enforcement strategies, focus and policies in response to the changing dynamics of business. They are working to ensure that their resources are being applied to the right issues and taxpayers. They share more leading practices and taxpayer information with their foreign counterparts, to help them collect every dollar due.

    Disputes are on the rise

    The result has been more  frequent, complex and higher value disputes between taxpayers and taxing authorities — a trend that is only increasing as countries collaborate together and as emerging markets gain in stature and influence, taking a more sophisticated approach to taxation. Penalties are becoming more stringent and the threat of reputational risk has risen significantly in recent months.

    We can help you to navigate a route through this complex landscape.

    We can help you monitor and react to quickly-changing tax policy and assess the economic and fiscal impact.

    Where tax policies might create an impediment to your business that is unintended by policy makers, we can help you to collaborate – either solely, or as part of a broader grouping of companies who share a common objective – with government to:

    • Explain the impediment
    • Develop alternative policy choices which are logical and well thought out
    • Model the potential outcomes
    • Deliver an alternative choice to the government in a form with which policy makers can comfortably work

    We also help you address your global tax controversy, enforcement and disclosure needs.

    We focus on pre-filing controversy management to help you properly and consistently file your returns and prepare the relevant back-up documentation.

    Where a controversy has already occurred, our professionals leverage the network's collective knowledge of how tax authorities operate, and increasingly work together, to help resolve difficult or sensitive tax disputes. To ensure that continuous performance improvements are instigated after a controversy, we work with EY's other tax professionals to ensure that similar events are less likely to occur.

    Below you can access our views and analysis of some of the substantial policy and enforcement trends and issues at play today.

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  • Seizing the opportunity in Global Compliance and Reporting

    Global Compliance and Reporting (GCR) is at a tipping point. Many companies distribute responsibility for GCR processes throughout their organization creating a patchwork. The results are suboptimal. Our recent survey shows a need for a new approach.

    Due to the combination of evolving business models, transforming finance functions and an increasingly complex regulatory landscape. There are new opportunities to better optimize efficiency, control and value, to help mitigate risk and improve performance.

    What is Global Compliance and Reporting?

    GCR comprises the key elements of a company's finance and tax processes that prepare statutory financial and tax filings as required in countries around the world. These duties include:

    • Statutory accounting and reporting
    • Tax accounting and provisions
    • Income tax compliance
    • Indirect tax compliance
    • Governance and control of the above processes

    GCR activities reside in the middle of a broader set of so-called record-to-report (R2R) processes. R2R is the intersection between any company's finance and tax departments and is used to capture, process and store information that is essential to statutory accounting, tax compliance and reporting. Any change to R2R processes, information, finance systems, roles and responsibilities will have a direct impact on GCR processes.

    Risk on the rise

    GCR risks are on the rise. Local jurisdictions are rewriting regulations, focusing more intently on the collection of tax revenues and sharing more taxpayer information across borders. At the same time, the global financial crisis has driven companies to redesign their finance operating models to remain competitive and to take advantage of opportunities for growth.

    Our new report Seizing the opportunity in Global Compliance and Reporting investigates the significant developments taking place as multinational companies determine the best way to meet financial reporting and tax obligations worldwide.

    Our case study highlights how we helped leverage an array of external providers

    Helping you achieve meet the new GCR demands

    Fast changing compliance and reporting requirements are more demanding on tax and finance functions today than ever before. So how do you improve control and quality, manage risk, create efficiency and drive value?

    Our market-leading approach combines standard and efficient processes, highly effective tools and an extensive network of local tax and accounting subject matter professionals.

    See more on how we can help you meet the demands of today's tax landscape

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  • Building effective supply chains

    As multinational companies seek to reach new markets and compete more effectively in mature markets, they are adapting and differentiating their supply chains. Companies’ operating models need to cater for efficiency and scale in mature markets, while having the flexibility and local ability to support growth in emerging markets. Consequently, driving true shareholder value requires an operating model that combines global and regionally differentiated processes, and integrates these with local striking power and operational excellence.

    Leading companies recognize the need for integrating tax in their business planning and decision processes

    Whether companies seek to enter new markets or drive efficiencies in mature markets, leading companies understand the complexities of the international tax systems. The impact of both direct taxes and indirect taxes needs to be carefully considered and integrated to drive the effectiveness of the operating model while complying with all applicable local and international tax laws and effectively manage all tax risks. Operating model effectiveness is becoming one of the cornerstones of successful competition and differentiation.

    Our approach

    The EY TESCM offering helps ensure you do just that. Our advisory and tax professionals operate as one team to assist our clients with developing and implementing operating model optimization where business needs and requirements are the driver while making sure that tax is an integrated part of the design of the operating model architecture.

  • Managing mobile workforce risk

    In today's globally integrated, tightly regulated and increasingly competitive business environment, one critical success factor stands out: people. People represent an organization's most significant investment and offer a tremendous opportunity to gain a competitive advantage.

    Where the leading companies are focusing their efforts

    • Attracting and retaining the right people
    • Global talent deployment and mobility
    • HR and payroll effectiveness
    • Risk, governance and compliance

    Managing the risks of mobile employees

    While optimizing the competitive advantage of your people has long been a core objective, a more recent set of trends in the tax landscape means that large companies with an internationally mobile workforce are at a higher risk of tax noncompliance and resulting controversy than ever before.

    The business and tax landscapes that have changed so much over the last few years continue to shift. The pace of globalization is increasing, and the global financial crisis has acted as a catalyst to both globalization and business transformation, with many emerging markets now seeing faster growth than before the crisis.

    Alongside these megatrends, a variety of underlying issues are converging, resulting in a growing set of risks for multinationals who have globally mobile employees. While companies may closely define and execute their formal expatriate assignment policies, business travelers outside the scope of such formal policies are widely accepted to be creating a new set of risks for companies to manage.

    Unintended tax compliance obligations

    These travelers are increasingly creating unintended tax compliance obligations, and the resulting risks are not just personal. They are increasingly felt at the corporate level, with the corporate tax function often unaware of the extent of the spreading problem. Tax administrations are becoming increasingly aware of the issue, however, and are very effectively using new technology to identify where a tax obligation has arisen. In a rising tax enforcement landscape, this issue has significant potential to grow.

    Managing these risks should be a burning platform issue for multinational companies.

    A burning platform?

    What may start as a relatively simple personal income tax compliance issue can quickly create a ripple effect, with risks such as the creation of a permanent establishment, an employment tax audit or the payment of a significant related penalty all occurring at the corporate level.

    At the same time, the pace of legislative change (such as the increasing enforcement of permanent establishment) is actually speeding up. Countries are using this type of legislation to increase overall levels of tax revenue.

    As governments continue to look for ways to widen the tax base, they are likely to learn from one another in fora such as the OECD's Forum on Tax Administration, CIAT, CIOT and SGATAR and quickly replicate the processes and technologies used. As they do so, we will likely see penetration of this issue into a broader number of companies of smaller size.

    Companies, recognizing the spectrum of reputational, personal and financial risks related to tax, are making strong efforts to be compliant. There is an increasing acceptance that such issues are becoming increasingly urgent from both a reputational and a financial perspective.

    How we are helping companies

    Our Human Capital network embeds processes and technology that will help companies to identify and manage STBT-related risks before they occur. Where controversy has already arisen, EY's global Tax Controversy network can use our insights into the culture and processes and relationships with each key tax administration to remediate issues. With prior year issues being rapidly unearthed, and with tax administrations focusing on this issue more than ever before, the time to act is now.

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