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Total tax transparency

The future of tax transparency opens your business to game-changing risks. But with these risks comes opportunity. How will your business steer through the risks of total tax transparency? And how can you take advantage of the opportunities?

Tax affairs used to be a largely private matter between company and tax authority, with very little public disclosure beyond what was available in the report and accounts. Today, the veil of confidentiality is being stripped away.

Game-changing tax risks

The tax risks include the glare of public scrutiny and sensitivities over tax planning that go with this. You also need to make sure that tax strategies are consistently applied throughout your organisation, and that your systems are up to speed with the demands of real-time tax assessment.

But with these risks comes opportunity. It gives opportunity to highlight your commitment to doing the ‘right thing’ and the contribution you make to society through the tax you pay.

In 'Total tax transparency' we look at three drivers for this more transparent and sensitive tax landscape.

1. Disclosures are increasing

Tax authorities are facing increasing public and political pressure to root out what is, or at least what is perceived to be, tax avoidance and aggressive tax planning. As a result, the relationship with companies and the confidentiality that underpinned this are giving way to a more publicly transparent and potentially adversarial approach. This can go as far as seeking to publically ‘name and shame’ particular companies.

2. Tax authorities are sharing information ever more freely

The OECD’s Base Erosion Profit Sharing (BEPS) Action Plan expands the exchange of information through Country-by-Country (CbC) reporting. It also develops the mandatory exchange of information between tax authorities on rulings that could give rise to BEPS concerns.

Individual tax authorities are also building stronger mechanisms for information exchange into new and updated bi-lateral treaties.

3. Tax authorities are assessing in real-time

Tax authorities want more information, sooner. This puts intense pressure on tax function output and verification. Tax authorities are also using electronic information for faster and more effective tagging, risk analysis and targeting of companies for investigation and audit.

You used to be able to prepare a return after the other financials were finalised. Tax authorities are now beginning to drill into the numbers at source.

A new reality

As a business, you already face the pincer of more tax data in the public domain and more public focus on it. Looking at the future, we expect greater public appetite for tax transparency, more information required to be disclosed and tougher questions.

Download the article for more information on some of the implications to your business and the actions you can take to get ahead. If you would like to discuss any of the areas raised, please contact us.