“Governments are sharing information, and tax authorities are collaborating across the border,” says Calafia Franco, EY Latin American Business Center Controversy Leader. “Now that tax authorities have more information, they are getting more aggressive. They have better position to challenge some tax issues.”
Says Jeffrey Michalak, EY Global International Tax and Transaction Services Leader, “Historically, global companies treated audits as discrete events. They would settle an audit issue, a cross-border issue, with one or perhaps both sides of a cross-border transaction. That audit issue may come up in a very similar transaction somewhere around the globe, and that also would be a discrete settlement.”
“Today, with information sharing,” Jeffrey says, “when I settle the one audit, the first audit, other countries around the world where I am doing similar types of transactions in my business see that audit settlement. That influences the conversations I have with other governments around the world.”
Adds Rob Hanson, EY Global Tax Controversy Leader, “We have developed frameworks for companies to track and manage controversy globally. We’ve helped them develop globally integrated structures and policies around managing tax controversy.”
“The result,” Rob says, “is that these companies now have centralized repositories of audits. This allows them to have better oversight and control of their audits around the globe. It also allows them to share issues and best practices internally.”
Watch more in our video series on the future of tax.