Tax controversy: a typical picture
How are companies experiencing this interconnectivity? Take, for example this increasingly common scenario. A multinational firm is confronting many tax controversy challenges around the globe including:
- A transfer-pricing dispute with the German Federal Central Tax Office
- Argentine authorities that are considering revoking an operating license
- A Southeast Asian nation preparing to “name and shame” the company in the newspapers
- Several ongoing contentious disputes in multiple jurisdictions where the company has operations
In addition, the company is about to undertake a corporate restructuring in Russia, adding another layer of tax exposure. By the end of the year, this organization is facing controversies with dozens of different tax authorities – and its leadership is looking to the vice president of tax for a strategy to manage and resolve existing controversies and to mitigate future controversies.
The company is experiencing first-hand how the tax information collection and sharing process has accelerated, triggering an increase in tax controversy. Governments worldwide are collecting more from corporations, and they are using a combination of multilateral transparency reforms, digitization, vast data collection, and enhanced data analysis to identify and act on tax issues.