Read our response to the Autumn Statement and the latest thought leadership, news, and alerts.
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.
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.
Across the world, the shift from direct to indirect taxation continues. See which global indirect tax trends are transpiring right now.
Our interactive country map will help you gain insights into the cloud computing corporate tax regimes across the globe.
With transfer pricing issues under close scrutiny worldwide, here’s how companies are managing the risks.
Our recently updated guide covers even more countries than before. Gain insight into each country's tax system as well as recent corporate tax developments.
Read the latest issue of Under the Spotlight (June 2013), our tax controversy and risk management magazine.
We look at both the issues and opportunities that multinational companies face in doing business in emerging and fast-growing economies. Get our insights.
Autumn Statement 2013
Tax Policy and Controversy Briefing goes online
Indirect Tax Briefing: eighth edition
Worldwide Cloud Computing Tax Guide (2013-2014)
2013 Global Transfer Pricing Survey
2013 Worldwide corporate tax guide
Under the spotlight: June 2013
Managing indirect taxes in rapid-growth markets
- About Our Global Tax Services
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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:
Budget Alert 2013
The Budget Alert is based on the Budget Speech presented to the House of Commons by the Chancellor of the Exchequer, the Rt Hon George Osborne, on Wednesday 20 March 2013, and on related Government announcements.
Finance Bill Alert
Finance Bill 2013 (271K, April 2013) reflects two sides of the Government's tax policy – the need to encourage investment and entrepreneurs, and ensure taxation is paid in line with policy.
Infrastructure and Construction Alert
Looks at measures discussed in the Chancellor’s Budget of particular relevance to the infrastructure and construction sector 193K, March 2013.
Highlights key Budget measures of interest to those in the banking industry 226K, March 2013.
Asset Management Alert 235K, March 2013
Looks at measures discussed in the Chancellor’s Budget speech, as well as those detailed in supplementary documents released later.
HR and Tax Alert
Looks at measures discussed in the Chancellor’s Budget relevant to internationally mobile employees and their employers 151K, March 2013.
EY ITEM Club Budget Reaction
The Budget should help lift the gloom of a very bleak economic backdrop, says the ITEM Club 105K, March 2013.
Tax avoidance and Government contracts
The Budget confirmed that, from 1 April 2013, new rules will require potential suppliers under Government contracts to certify non-involvement in certain tax avoidance arrangements 382K, March 2013.
Oil and Gas Alert
The Chancellor's Budget confirmed that in 2013 oil and gas companies (173K, March 2013) will be able to enter Government contracts for decommissioning relief at specific levels.
Keeping the UK open for business
Our thought leadership paper (534K, March 2013) considers the extent to which the Chancellor’s ‘Corporate Tax Roadmap’ is still on track, and how he could use the Budget to fix any potential bumps in the road.
EY ITEM Club Budget Preview
In its Budget preview, ITEM says the UK will escape further austerity, but is calling for investment in infrastructure and housing to boost short term growth.
Budget Alert 2012
The Budget Alert is based on the Budget Speech presented to the House of Commons by the Chancellor of the Exchequer, the Rt Hon George Osborne, on Wednesday 21 March 2012 and on related Government announcements.
Budget web seminar, 22 March 2012
EY tax partners Chris Sanger and Patrick Stevens, and the ITEM Club's Andrew Goodwin, provided their immediate insights on the changes and proposals which came out of the Budget.
View online | MP4 download | Presentation slides 320K, March 2012
Alternative Asset Management Alert 173K, March 2012
Asset Management Alert 170K, March 2012
Banking Alert 457K, March 2012
HR and Tax Alert 228K, March 2012
Infrastructure and PPP PFI161K, March 2012
Insurance Alert 163K, March 2012
Real Estate update 163K, March 2012
Worldwide Debt Cap 164K, March 2012
Finding the balance: Creating a broader roadmap for the UK tax system
With the 2012 Budget fast approaching, this paper considers what has worked so far and where there is more to be done 557K, March 2012
For more information, please call our Budget hotline on +44 20 7951 5000
Updated 2012-13 tax tables
Download our 2012-13 tax tables (1.68 MB) which contain personal, corporate and indirect tax rates.
Midweek Tax News
A weekly update on tax matters to 3 December 2013
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.
In advance of the Chancellor's Autumn Statement on 5 December, we will be making the ITEM Club pre-Autumn Statement economic analysis available on 4 December. We will be producing our summary of the key tax items and issues arising out of the Autumn Statement on the 5 December and will follow that with a short podcast available in the afternoon of 6 December.
There have already been a number of tax policy announcements, ranging from the re-introduction of the married couples allowance to the recently promised reduction in energy bills. Part of this latter policy is to be paid for from money raised from tax avoidance and we can expect the Chancellor to provide more details on this. It is not clear whether this tax avoidance clampdown will be the continuation of policies already announced or whether we will see new measures on Thursday. We do expect reference to the work being done at OECD level and the new code of practice on taxation for banks. What is generally expected is an extension of capital gains tax to non-resident owners of residential property, encouragement for employee-ownership and some help for business in respect of business rates. We also expect to see increases in the personal allowance thresholds though these may not be fully passed on to higher-rate taxpayers (as in previous years).
On 10 December, we will be producing a summary of key developments in both the draft Finance Bill clauses and the Government's summaries of responses to consultations, which are expected to be published at the same time.
Our next Tax Focus web seminar at 15:00 on 11 December 2013 will provide an update on both these areas along with the key developments from the Autumn Statement. By that time, we may also have an indication on any progress on the EU Code of Conduct review of the Patent Box rules.
If you would like to register for the web seminar please click here.
Action 13 of the OECD Base Erosion and Profit Shifting (BEPS) Action Plan
We are seeing more and more businesses starting to focus on the practical implications of Action 13 of the BEPS Action Plan. Action 13 looks at country-by-country reporting (CBCR) to tax authorities and transfer pricing documentation. The last few weeks have seen a number of meetings and discussions in relation to Action 13, which have highlighted some key concerns.
OECD Working Party 6 held two weeks of meetings in November with part of that focused on Action 13. We expect a discussion document to be issued in February 2014 for public comment, with a view to moving to a fairly final version of the CBCR template in May 2014. Action 13 is due to be completed in September 2014, though countries will then need to implement the proposals into domestic law.
We have met with the head of the OECD's transfer pricing unit to discuss Action 13 and, together with a number of multinational groups, have had discussions with HMRC and HM Treasury both as to a possible template for providing information to the tax authorities and the use of that information by the tax authorities.
We are seeing many groups looking at the detailed steps they may need to take to be able to comply with the Action 13 proposals. A key area of concern is whether the CBCR template will be required to follow a ‘top down’ approach (starting from the consolidated accounts) or a ‘bottom up’ approach (starting with local entity statutory accounts).
In our meetings, most groups have felt that they could produce key elements of data on one basis or the other. There has not been unanimity on the preferred method as this depends upon the group's accounting systems and on the nature of their business. Many businesses have felt that CBCR of profit before tax, cash tax paid and employee numbers would be possible, though not without challenge. However, the provision of other information being considered as part of Action 13 has been felt either to be very difficult to produce or not to provide useful indicators to tax authorities. In our meeting with HMRC we discussed a number of possible options for data on economic activity, including HMRC's suggestion of tick boxes for activity types, companies providing their own description of activities, as well as the banding of employees by salary or grade. Each option was felt to present challenges.
Groups are also concerned that the data provided under the template may become public either because one country allows the information into the public domain or, more generally, because the call for public disclosure grows once the data is produced. There is apprehension that public disclosure of the CBCR template may lead to a misunderstanding of a group's position as the public will not have the same level of understanding of tax law nor access to other information available to the tax authorities. Many groups are continually assessing the level of public disclosures and the best way to build stakeholder confidence in their tax positions.
It is clear to us that groups are engaging with the Action 13 proposals and evaluating what it might mean for them. From a systems perspective, the focus for most has thus far been around the CBCR template as it has been made clear that this template will be mandated. However, many groups are also actively considering the impact of the wider transfer pricing documentation proposals. Please speak to your usual EY contact if you would like to discuss what the proposals might mean for you, both in terms of systems and your supply chain and structure more generally, or to discuss your approach to public disclosures on tax.
OECD Base Erosion and Profit Shifting (BEPS) Action Plan: Timeline
The OECD has published a calendar for planned stakeholders’ input on the OECD Action Plan on BEPS. 15 Actions were highlighted in the Action Plan which are to be implemented over the next two years. These Actions call for developments to be introduced via amendments to double tax treaties, Commentary on the OECD Model Tax Convention, Transfer Pricing Guidelines and domestic law.
The timeline of the BEPS Project is extremely ambitious, with the first outputs expected for September 2014 and the completion of the project by the end of 2015. The timetable issued yesterday lists two dates in respect of each of the following items (the first is the proposed date for publication of a discussion draft and the second the expected date for public consultation):
• transfer pricing documentation and the template for country-by-country reporting (February 2014 and March 2014 respectively);
• the tax challenges of a digital economy (February 2014 and April 2014 respectively);
• hybrid mismatch arrangements (March 2014 and April 2014 respectively); and
• tax treaty abuse (March 2014 and April/May 2014 respectively).
The date for a request for input on data/effective tax rate methodology is also listed as January 2014.
We will continue to bring you development in this area in future editions of Midweek Tax News.
HM Treasury review of tax exemption on financial spread betting
During the House of Lords debate on the Financial Services (Banking Reform) Bill on 27 November 2013, there was some discussion regarding how certain derivative trades that are currently classified as gambling are exempt from particular tax charges. Case law limits the situations in which such contracts are subject to tax as income and they benefit from a statutory exemption from capital gains tax. Such contracts also fall outside the scope of stamp duty and stamp duty reserve tax.
This was described by Lord Eatwell as “...a really extraordinary form of tax avoidance within the financial services industry.” He went on to refer to the fact that Australia had recently removed the tax exemption for such forms of contracts, and called on the Government to review the designation of particular derivative contracts as gambling, the consequences of which include a “...significant loss of revenue to the Treasury”. In response, Lord Newby (HM Treasury spokesperson to House of Lords) agreed that, at first sight, this appeared “...to be a loophole...” and undertook to raise the matter with HM Treasury “...in the context of measures that might be brought forward in a future Finance Bill”.
The consequences of financial spread betting becoming liable to tax could be very significant. Businesses may wish to consider the impact of any potential changes.
Proposed amendments to EU Parent-Subsidiary Directive
On 25 November 2013, the European Commission proposed amendments to the EU Parent-Subsidiary Directive which, in its view, has been used by some companies to escape taxation. The Directive was originally conceived to prevent group companies, based in different Member States, from being taxed twice on the same income. However, in the Commission's view certain companies have exploited provisions in the Directive and mismatches between national tax rules to avoid being taxed in any Member State at all. The proposal aims to address this issue:
• First, it updates the current anti-abuse provision in the Directive. This is intended to prevent groups from claiming the benefit of the Directive where there are artificial arrangements used for tax avoidance purposes and ensure taxation takes place on the basis of real economic substance.
• Second, it will ensure that the Directive is amended so that certain specific tax planning arrangements (described as hybrid loan arrangements) cannot benefit from tax exemptions. Under the proposal, the exemption will not be available for distributions of profits that are deductible by the subsidiary of the parent company.
At this stage the amendments are only a proposal, which may be vetoed by Member States. In the event, though, that the amendments are approved it would then be up to individual Member States to implement domestic (or treaty based) law to put this into effect. The proposal is that such changes would need to be put into effect by 31 December 2014 at the latest.
However, how the proposals would interact with the domestic law of Member States is itself a source of debate. UK domestic law does not impose a withholding tax on dividends and provides for a general tax exemption subject to certain conditions on all dividend income that is unrelated to the Directive. It is by no means clear, therefore, that the UK would need to revisit the scope of the existing UK general anti-abuse rule and anti-arbitrage rules which currently diverge from that suggested in the draft amendment to the Directive. Other Member States whose domestic dividend relieving provisions are more clearly based on the application of the Directive may be in a different position.
Please see our international tax alert for more detail.
Other UK developments
Employee benefit trusts: Call for evidence
The Department for Business, Innovation & Skills has published a call for evidence regarding a proposal to abolish the rule against perpetuities for some or all employee benefit trusts as part of what Government can do to further reduce the complexity of businesses adopting employee ownership. This rule addresses the issue of the extent to which one generation should be able to dictate the future use and ownership of property. It does so by restricting the length of time which the creator of the legal arrangement can pre-determine the future ownership of property held in trust. The document also welcomes views on how to further reduce non-tax regulations that may act as a barrier to employee ownership.
Tax treaties update: Spain and China
A number of draft tax treaties were discussed by the Delegated Legislation Committee of the House of Commons on 27 November 2013. The Exchequer Secretary advised that:
• The treaty with Spain was approved by the Spanish Council of Ministers on 20 September and is now going through the Spanish parliamentary process. However, he noted that it appears that that process will not be completed this year. On that basis, the new treaty will not take effect until January 2015.
• China has now ratified both the 2011 double tax agreement and the further protocol. The treaty will, therefore, enter into force as soon as the UK has ratified the protocol.
First-tier Tribunal considers the VAT treatment of payment handling services
In the case of DPAS Ltd, the First-tier Tribunal considered whether the taxpayer, which operated dental payment plans on behalf of dentists, was entitled to exempt its charges made directly to patients for the provision of payment handling services. The taxpayer had restructured its contractual arrangements following the judgment of the Court of Justice of the European Union (CJEU) in the case of AXA UK plc. In that case, the CJEU held that the service of collecting payments provided to dentists was specifically excluded from the exemption as it amounted to the collection of debts and was, therefore, liable to the standard rate of VAT. However, in the present case, the Tribunal held that the service supplied by the taxpayer to patients was not debt collection, as debt collection could only be performed for the creditor (ie the dentists). On this basis, the Tribunal held that the taxpayer made exempt supplies of payment handling services to patients. Any taxpayers who make charges for handling or processing payments may wish to consider the implications of this decision for their business.
Authorised Investment Funds regulations amendments
The Authorised Investment Funds (Tax) (Amendment) (No. 2) Regulations 2013 are now final. These regulations amend the Authorised Investment Funds (Tax) Regulations 2006 (the Regulations) and are intended to make certain that bond funds are more attractive to overseas investors. They also amend the Regulations to remove references to ‘ordinarily’ resident.
Automatic exchange of information
Following the meeting of the Global Forum on Tax Transparency in Jakarta in November, Luxembourg, Liechtenstein, Colombia, Greece, Iceland and Malta have agreed to automatically share information on UK taxpayers with HMRC through the pilot initiative launched by the G5 on automatic exchange of tax information. Thirty-seven jurisdictions have now signed up to the pilot.
Employment related shares and securities bulletin
HMRC has published its eleventh Employment-Related Shares and Securities Bulletin providing information and updates on developments relating to employment-related securities, including the tax-advantaged employee share schemes.
This edition includes updates on the ‘employee shareholder’ status available from 1 September 2013 and the updated guidance as to the circumstances in which HMRC will not challenge an individual's status as an employee shareholder for tax purposes.
In addition, there is clarification as to what constitutes a general offer on a company reorganisation and hence a qualifying rollover of options under enterprise management incentives. Clarification is also given as to HMRC's position on automatic enrolment of employees into awards of free shares under share incentive plans and a reminder that businesses awarding employment-related securities need to register their share plans from 6 April 2014 for online filing which starts from 6 April 2015.
There are also a number of changes to HMRC's Employment Related Securities Manual which reflect the introduction of the statutory residence test and also, significantly, updated guidance on the tax treatment of securities options. The latter highlights what HMRC considers to be ‘legal options’, in essence, rights to acquire securities that constitute money's worth for general earnings purposes on acquisition, based on the principles outlined in Abbott v Philbin. HMRC no longer takes the view that all rights to acquire securities can be considered to be legal options and many long term incentive plans and restricted stock units fall short of the required definition.
This change in approach potentially affects share options granted to non-residents. HMRC's new approach seeks to reclassify as non-marketable rights share awards that have, in the past, been accepted as ‘legal options’. This means that an income tax charge (typically on a proportion of the gain) could apply for employees inbound to the UK who were not resident at the date of grant of the award.
Companies may wish to review the tax treatment of their share plans, particularly any long term incentive plans. Our tax alert provides further details of HMRC's new approach.
OECD discussion draft on tax treaty treatment of termination payments
On 25 June 2013, the OECD Committee on Fiscal Affairs released for public comment a discussion draft on the tax treatment of various payments that may be made following the termination of an employment. It identified 13 types of commonly used termination approaches on which they suggest specific sourcing rules. The proposal for additions and changes to the OECD Commentary on the Model Tax Convention was prompted by conflicting interpretation among OECD members which led to instances of double taxation or instances of double non-taxation.
Given the level of detail of very specific sourcing rules on termination payments, the draft amended commentary is intended to make it easier for companies employing individuals in cross-border scenarios. They help provide a common base for all OECD members and so help minimise potential conflicts leading to double taxation. The OECD has now published the comments (including those made by EY) received on this discussion draft. Our responses are available from your usual EY contact.
German tax policy priorities
Germany's coalition government has released a coalition agreement, stating intentions for their law-making priorities over the next four years. Tax policy statements include a plan to examine whether capital gains from the disposal of portfolio investments (equity interests of less than 10%) should be subject to full corporate income tax; under current rules, only 5 % of capital gains from portfolio investments are effectively taxed. The coalition agreement also states that international double non-taxation/double deductions will continue to be targeted with automatic transfer of information on a global scale to ensure greater transparency. There is also support for a common corporate tax base in the EU. Our international tax alert sets out other tax policy statements.
Dutch decree on transfer pricing and application of the arm's length principle
The Dutch State Secretary of Finance has published a decree on transfer pricing and the application of the OECD's Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. The Decree combines and replaces two previous decrees on transfer pricing and contains a number of new sections reflecting Dutch case law developments as well as developments related to the OECD's project on transfer pricing aspects of intangibles. The Decree provides important insights into the Dutch tax administration's position in applying the arm's length principle. Our international tax alert provides further details.
Other international tax alerts
Please see a selection of our international tax alerts in respect of the following developments. Additional articles are available in our Global tax alert library.
US: IRS proposes updates to procedures for competent authority assistance
US: IRS issues proposed procedure on administration of Advanced Pricing Agreements.
The IRS is seeking comments from taxpayers on both notices by 10 March 2014.
Please speak to your usual EY contact, or email us at email@example.com, if you would like to receive a copy of our regular indirect tax newsletter, or information about our other publications.
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.
|+ 44 20 7951 7076|
Action 13 of the OECD Base Erosion and Profit Shifting Action Plan
|+ 44 20 7951 2486|
OECD Base Erosion and Profit Shifting Action Plan: Timeline
|+ 44 20 7951 2486|
HM Treasury review of tax exemption on financial spread betting
|+ 44 20 7951 2846|
Proposed amendments to EU Parent-Subsidiary Directive
|+ 44 20 7951 4246|
For other queries or comments please email firstname.lastname@example.org.
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.
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.
2011 Tax policy outlook around the world
As tax authorities adapt their enforcement in response to changing business dynamics, so must taxpayers. One key is the knowledge of alternative dispute resolution tools.
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
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.
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.
Immigration and tax laws are increasingly aggressive toward business travelers and their companies. Leading companies actively mitigate business travel risks. Do you?
Your talent is in motion. Are you ready to join the conversation?
This edition looks at the revised Directors’ Remuneration Report regulations, mitigating the downward trend in wages across the UK without increasing costs, and the new employee shareholder status.
Finance Bill 2013 training webcasts
We have produced four recorded modules to highlight the main changes in corporate tax, personal tax, and the GAAR outlined in the Finance Bill 2013.
Issue 10 of T Magazine looks at how tax risk and controversy has changed since the financial crisis, and explores the evolving relationship between companies and their external stakeholders.
Connect with us
Stay connected with us through social media, email alerts or webcasts. Or download our EY Insights app for mobile devices.
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.
We are pleased to be an International Tax Review 2013 European Tax Award winner.