Tax Management Consulting
Deloitte Tohmatsu Tax Co. helps businesses meet the challenges of multi-jurisdictional tax operations, including compliance, reporting and risk management for direct and indirect taxes. We help businesses to understand and transform their processes, technology and resourcing models and where appropriate offer global outsourcing capabilities.
Why consider tax management now?
The tax regulatory environment has been rapidly changing and has become increasingly complicated in recent years. Among other things this is due to various measures implemented by government tax authorities, including the Japan National Tax Agency, to improve corporate governance and address actions outlined in the OECD’s Base Erosion and Profit Shifting (“BEPS”) Action Plan. As a result, proactive tax management on a global level, which has not been necessary for Japanese companies until now, is becoming increasingly important.
Common challenges regarding BEPS Action 13
- Policy development and review on a global level (i.e. implementation of master and local files)
- Implementing a tax focused reporting structure for information gathering for country-by-country reporting (“CbCR”) purposes
Furthermore, the continuing globalization of Japanese companies through overseas M&A activity can impair visibility of their overseas subsidiaries’ tax operations. For example, it is becoming increasingly common that Japanese tax teams become involved in tax related incidents involving their overseas subsidiaries after the fact due to insufficient prior analysis around tax implications in cross-border transactions.
Common challenges resulting from increased outbound investment and M&A
- Gaining visiblity of sub-consolidated entities of acquired foreign subsidiaries
- Foreign risk is often reported after it has materialised into a serious issue
- As a result, tax implications in Japan which may have been preventable with prior analysis of tax structures are dealt with after the fact
Tax departments of Japanese companies face significant human resource challenges in dealing with these issues, which are not just of a tax but also a managerial nature. A change in the mindset of management and the structure of the tax function is necessary to adapt to the current environment. But soliciting support for such change may be difficult since many businesses regard tax as a minor part of their overall accounting and finance responsibilities. Tax departments, which have not been exposed to major changes, are now required to transform themselves.
Common challenges responding to the current environment
- Insufficient human resources in particular staff with English speaking skills
- Embracing unconventional solutions to respond to global challenges
- Limited time to focus on transformation projects since existing resources are dedicated to compliance activities
- Insufficient budget to implement tax related technologies that can support tax operations
- Changing the mindset of management and structure of tax departments
Deloitte provides clients with advice around tax compliance and tax risk management in cooperation with its member firms in 150 countries around the world. We assist busineses in enacting change and supporting their response to regional and global tax challenges. We also provide support around improving compliance quality and corporate value through the use of state-of-the-art technologies.