How do you see the in-house tax function evolving over the next decade?
The focus on total tax risk will be a primary driver, measured by relevant KPIs based upon a global tax risk framework. Talented people will be highly essential for the evolving function, with their focus evolving into a risk-based process-oriented environment that is based upon developing and implementing best practices while monitoring tax risks.
Additionally, minimizing double taxation and the ability to resolve tax disputes effectively will become essential tools as international tax rules undergo evolutionary changes.
You have over 30 years of experience, primarily at US based multinationals and are now based in the UK. Can Europe learn anything from America or vice versa?
The US federal tax system recognizes the benefits of appeal and arbitration avenues while maintaining its sovereignty, whereas the EU member states remain divisive on this significant point.
Europe’s targeted efforts on the OECD BEPS proposals and international tax framework receive continuous focus as a leader in this initiative, although the lack of European unity and consistency by the member states serve to promote further uncertainty.
Your website, Strategizingtaxrisks.com, looks at practical best practices to strategize tax risks of multinational corporations. There is pressure for corporates to be more transparent on tax issues. Can you offer any insight into the balance of risks and transparency?
MNEs, tax administrations and interested organizations are focused on various risk tools to achieve additional transparency, although the current balance is unfairly weighted. International tax is highly complex, and efforts to gain additional transparency are driving further complexity and misguided legislation based upon politically based initiatives that do not accurately address the relevant risks and long-standing precedents.
The transparency initiatives have been targeted at receiving additional information from MNEs, whereas the risk rating process, discussion of a taxpayer’s risk profile with the tax administration, legislation to avoid double taxation, the MAP arbitration process and information exchanged between tax administrations lack a similar balance of transparency.
The focus on risks is a welcome initiative, although it should not evolve into legislation inconsistent with established tenets of international tax law. Recharacterisation and exception based proposals further detract from the consistent application of transfer pricing principles.
What’s your view on BEPS?
BEPS is a valiant initiative and the OECD’s efforts to provide worldwide consistency and updated guidance are welcome. However, countries have started to legislate the perceived intent of BEPS to further their domestic objectives and encourage foreign direct investment, promoting worldwide inconsistency.
The unilateral implementation of proposed guidelines is unlikely to change, thereby promoting additional complexity, inconsistency, and pathways for additional assessments and disputes. As a result, the incidence of double taxation will increase exponentially and the true intent of BEPS filtered directionally with additional resources required by MNEs and tax administrations.
What’s the biggest hurdle you face in your role?
Balancing multiple objectives to support the global business while maintaining value-added focus on global priorities constitutes the biggest hurdle. Additionally, BEPS guidelines and inconsistent unilateral legislative actions further impact efforts to provide worldwide best practices and processes.
What’s the key challenge facing your industry sector?
Transfer pricing and aggressive audit actions by many tax authorities around the world, further incentivised by BEPS, are a key challenge for most industries.
New transfer pricing initiatives and customized rules for documentation provide additional challenges to provide efficient compliance processes while introducing additional demands for more people and new processes.
If you could make one change to UK tax law, what would it be?
Although the diverted profits tax is in draft form, I would not recommend implementation of this proposal until further reconsideration, submission of additional comments and finalization of the OECD Guidelines. The UK has been a leader in the implementation of country by country reporting, and this aggressive initiative has complex issues yet to be resolved, including providing appeal processes prior to assessment and payment as well as provisions to avoid double taxation.
Tell us a secret about yourself.
I am a sports car enthusiast, having owned various Porsches for over 20 years. My passion for the marque evolved into a focused effort on driving at racetracks, leading to the ownership of a Porsche 911 racecar while obtaining certification as a track instructor and teaching others how to drive safely and quickly.
How do you see the in-house tax function evolving over the next decade?
The focus on total tax risk will be a primary driver, measured by relevant KPIs based upon a global tax risk framework. Talented people will be highly essential for the evolving function, with their focus evolving into a risk-based process-oriented environment that is based upon developing and implementing best practices while monitoring tax risks.
Additionally, minimizing double taxation and the ability to resolve tax disputes effectively will become essential tools as international tax rules undergo evolutionary changes.
You have over 30 years of experience, primarily at US based multinationals and are now based in the UK. Can Europe learn anything from America or vice versa?
The US federal tax system recognizes the benefits of appeal and arbitration avenues while maintaining its sovereignty, whereas the EU member states remain divisive on this significant point.
Europe’s targeted efforts on the OECD BEPS proposals and international tax framework receive continuous focus as a leader in this initiative, although the lack of European unity and consistency by the member states serve to promote further uncertainty.
Your website, Strategizingtaxrisks.com, looks at practical best practices to strategize tax risks of multinational corporations. There is pressure for corporates to be more transparent on tax issues. Can you offer any insight into the balance of risks and transparency?
MNEs, tax administrations and interested organizations are focused on various risk tools to achieve additional transparency, although the current balance is unfairly weighted. International tax is highly complex, and efforts to gain additional transparency are driving further complexity and misguided legislation based upon politically based initiatives that do not accurately address the relevant risks and long-standing precedents.
The transparency initiatives have been targeted at receiving additional information from MNEs, whereas the risk rating process, discussion of a taxpayer’s risk profile with the tax administration, legislation to avoid double taxation, the MAP arbitration process and information exchanged between tax administrations lack a similar balance of transparency.
The focus on risks is a welcome initiative, although it should not evolve into legislation inconsistent with established tenets of international tax law. Recharacterisation and exception based proposals further detract from the consistent application of transfer pricing principles.
What’s your view on BEPS?
BEPS is a valiant initiative and the OECD’s efforts to provide worldwide consistency and updated guidance are welcome. However, countries have started to legislate the perceived intent of BEPS to further their domestic objectives and encourage foreign direct investment, promoting worldwide inconsistency.
The unilateral implementation of proposed guidelines is unlikely to change, thereby promoting additional complexity, inconsistency, and pathways for additional assessments and disputes. As a result, the incidence of double taxation will increase exponentially and the true intent of BEPS filtered directionally with additional resources required by MNEs and tax administrations.
What’s the biggest hurdle you face in your role?
Balancing multiple objectives to support the global business while maintaining value-added focus on global priorities constitutes the biggest hurdle. Additionally, BEPS guidelines and inconsistent unilateral legislative actions further impact efforts to provide worldwide best practices and processes.
What’s the key challenge facing your industry sector?
Transfer pricing and aggressive audit actions by many tax authorities around the world, further incentivised by BEPS, are a key challenge for most industries.
New transfer pricing initiatives and customized rules for documentation provide additional challenges to provide efficient compliance processes while introducing additional demands for more people and new processes.
If you could make one change to UK tax law, what would it be?
Although the diverted profits tax is in draft form, I would not recommend implementation of this proposal until further reconsideration, submission of additional comments and finalization of the OECD Guidelines. The UK has been a leader in the implementation of country by country reporting, and this aggressive initiative has complex issues yet to be resolved, including providing appeal processes prior to assessment and payment as well as provisions to avoid double taxation.
Tell us a secret about yourself.
I am a sports car enthusiast, having owned various Porsches for over 20 years. My passion for the marque evolved into a focused effort on driving at racetracks, leading to the ownership of a Porsche 911 racecar while obtaining certification as a track instructor and teaching others how to drive safely and quickly.
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