What will happen to international tax planning?
International tax planning has come under much scrutiny over the past several months. In fact, the Organization for Economic Co-operation and Development (OECD) recently issued a report proposing an action plan to limit the arbitrage opportunities for tax planning between multiple jurisdictions. The focus is not just on the effort to avoid double taxation of income. Rather the focus is on limiting multinational enterprises to minimize the single level of tax imposed on their income.
The news has been full of examples of the positive impact tax planning has had on a number of companies with globally recognized brands while trying to illustrate how profits and tax revenue are often not connected with the jurisdictions that drive revenue. One of the goals of the OECD Action Plan is to ensure that profits are more closely reported in the jurisdictions where companies are physically operating and selling to customers.
Have you already begun your tax planning and are you concerned that your existing tax strategy could be affected by any changes? Do you even think a large number of sovereign countries can cooperate closely enough to actually effectuate change in a meaningful way?
One area of risk highlighted in the OECD Action Plan is reputational risk in the marketplace for those companies that pursue aggressive tax planning. Are you concerned that tax planning initiatives you consider may tarnish your reputation if they were understood by your customer base or business partners?