CFOs Issues: Rising Scrutiny, Transfer Pricing and Cost of Compliance

In its inaugural annual survey into the key tax issues facing multinational companies, Taxand found that chief financial officers (CFOs) and tax directors across the globe are battling a raft of tax issues in the light of rapid legislative change and increased scrutiny from governments, tax authorities, the media and general public.

The highlights of the survey include:

Increased pressure on tax departments:

  • Eighty-two percent of multinationals have experienced a rise in audits.
  • Eighty-four percent of multinationals surveyed said that increased transparency means they have experienced a rise in the cost of compliance.

A critical public:

  • Over half (51%) of multinationals believe exposure of tax planning activity has a detrimental impact on company reputation.

Tax not high on the board agenda:

  • Surprisingly, only 24% of multinationals surveyed said that tax issues were covered by their boards “to a great extent” given the concerns over reputation.

Cross border issues:

  • Transfer pricing seen as the most challenging area of tax globally.
  • Transfer pricing has seen the sharpest rise in scrutiny from tax authorities.

Desire for improvement:

  • Sixty-one percent of multinationals believe relationships with tax authorities have improved in the past year.
  • Almost three-quarters (74%) of multinationals stated global tax harmonisation is desirable.

Frédéric Donnedieu de Vabres, chairman of Taxand, said: “With tax collections high up most governments’ agendas following the global economic crisis and with ever tighter tax controls imposed by tax authorities, it is not surprising that multinationals are feeling the strain. The push for transparency and the rapid succession of tax changes across the world has also cost multinationals’ time, effort and money, while their tax planning strategies have featured negatively in the public and international media spotlight.”


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