What’s Ahead for Global Corporate Tax Structures?

The Organization for Economic Cooperation and Development (OECD) recently announced initial details in its plan to unify a global tax structure for corporations. The goal may be simple — to unify various aspects of corporate tax codes across more than 40 countries, making it harder for corporations to “shift” profits to more preferential tax structures. But confusion remains around exactly what these changes would mean for corporations and investors.

It is a difficult decision for businesses because tax issues can cause astronomical problems for businesses and corporations. This is why businesses must ensure that they understand how to pay taxes and their tax audits are all correct and up-to-date. Many businesses bring in lawyers to assist with tax audits (more from Brotman Law and other companies) to ensure that everything is to the correct standards. This may become more popular as new tax plans have been announced, meaning more confusion for companies, which could lead to severe tax issues.

Forbes spoke with Brian Tully, head of the transfer pricing business at Thomson Reuters, who “outlined the biggest challenges confronting businesses and governments as they start to dig into the OECD recommendations.” These included:

  • “Global Supply Chain Transparency: With the new master file standard, tax authorities would, for the first time, have visibility into a company’s total global supply chain structure across its entire operation, not just in one region. This will present some obvious administrative challenges, but it will also open up a new era of global operational transparency that has the potential to create opportunities for tax authorities and large corporations.”
  • “Central Reporting: The level of detail required for the proposed country-by-country reporting template is much more expansive than anything that has ever had to be collected or reported ever before. Data collection will be a challenge and it will likely require a central reporting tool that everyone can access around the world.”
  • “Increased Audits: Once some of these changes start to take effect, governments around the world are going to be reviewing data that they’ve never had to review before. This will result in an increase in audit activity on a global scale.”

It’s further unclear whether countries themselves will agree on the ultimate implementation of the rules. Foreign Policy notes: “It is also not clear that the countries involved even have similar goals. Although all of them would like corporations to pay more taxes, the question of where specifically they should pay them creates different answers.”