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Reputational risk could hinder growth, says Taxand

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The ongoing public debate surrounding the taxation of multinationals has led some people to believe that “any sort of supply chain planning” is now a thing of the past, according to Frédéric Donnedieu de Vabres, chairman of Taxand.

The global network of tax advisers, whose clients including multinationals, hosted a conference in New York where tax professionals discussed the effect of what it called a shift in focus “from fiscal to moral responsibility”.

“Media focus remains high and governments and the general public continue to deem tax planning as ‘immoral’,” Donnedieu de Vabres said. “These waves of attack on any supply chain planning could potentially backfire, by curtailing investment, thwarting growth and compressing innovation across the globe.”

He added: “In a global economic environment as fluid as it is at present, bona fide commercial business restructuring should be endorsed and even embraced, as a means of navigating the stagnant business landscape. The roles of finance and tax departments are in fact to contribute to shareholder value, alongside the need to manage their tax responsibilities across a number of jurisdictions.”

Multinationals must be prepared to confront reputational risks head on and defend against them, he said.

An “increasingly aggressive” approach taken by tax authorities pointed to the need for tax risk management to be embedded into corporate governance at board level to protect shareholder value.