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Reputation and cost top companies’s concerns when it comes to tax

Companies are concerned about the increased tax disclosure requirements and their impact on costs and reputation according to a global survey by Taxand.

Taxand, a tax advisor, has published its 2016 annual global survey of CFOs and Tax Directors regarding tax issues and the corporate tax environment.

Amongst the key findings, 75% of respondents said they were concerned about the potential exposure of information provided to meet country-by-country reporting. The concerns relate both to the potential for competitors to gain insights into one’s corporate strategy through this information and also to the potential “misunderstanding or misinterpretation of this information to confirm previously held erroneous beliefs”.

Tim Wach, Managing Director at Taxand said: “In recent years the heat on multinationals and their tax policies has been turned up as a result of a growing belief amongst the general public that multinationals are not paying enough tax and should be punished.  However, what would have previously been private collaboration with tax authorities is now too often being played out in a very public forum. Tax authorities are increasingly using the media to highlight their efforts to crackdown on multinationals, fuelling the public belief that multinationals are some sort of evil empire hell bent on evading tax.”

The survey also found that scrutiny from tax authorities had increased, with 77% of respondents saying that they have seen an increase in the number of audits undertaken by tax authorities in the past year.

Increase in requirements and scrutiny prompted respondent to predict a rise in compliance cost, with 89% of them believing that costs will increase.

Grant Thornton global leader for tax services Francesca Lagerberg told International Accounting Bulletin: “It’s probably no surprise that many of those in the 'firing line' around potential bad publicity on tax decisions, are highlighting how important the link can be between tax planning and reputation. Today it's not just about the letter of the law but also about public perception around the tax policy of a business.”

There is clear concern that the changes around tax may have cost implications, she continued. “These are not about the tax rates but about related administrative costs. It is important for Government's to keep in mind that businesses value clarity, certainty and wherever possible simplicity of administration.”

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