2017 Asia Pacific Tax Complexity Survey

Shifting sands: risk and reform in uncertain times

We find ourselves in a remarkable time, with recent political developments in the United States and Europe having the potential to dramatically alter the landscape of the global economy. Asia Pacific stands to both gain and lose from these changes. The unique characteristics of each country in the region means governments and companies have vastly different outlooks on their own economy and local tax environment. Almost everyone agrees that change is coming, but the unknown factor is what exactly will change and how?

The 2017 Asia Pacific Tax Complexity Survey was conducted against the backdrop of this shifting environment to gauge businesses' views of tax complexity, consistency and predictability in the current and anticipated tax environment in the region.

The 2017 survey revealed:

Predictability is now the key factor

  • From complexity in 2010, consistency in 2014, to predictability in 2017, tax professionals' views of the most important factors in business decision-making have evolved.
  • In 2017, 39% of respondents considered high predictability about future developments of tax law as the most important factor in today's business decision-making. This is followed by 32% of respondents who believe high consistency in interpreting and enforcement of tax law is most important, and 29% of respondents who see low complexity of tax laws as their primary consideration.

BEPS is top priority for government and companies

  • As the full extent of the BEPS recommendations are now more fully understood, almost 80% of respondents expressed concern about the implementation of BEPS-related measures, a significant increase from 60% three years ago.
  • The adoption of BEPS recommendations is the most commonly cited reform in the region. Respondents in 14 out of 20 jurisdictions consider it to be one of the top two priority areas for tax reform.

Tax strategy is increasingly conservative

  • Over 90% of respondents indicated that reputational risk is given at least some consideration in their businesses' tax strategy. Almost half of these respondents suggested they have given "a lot" of weight to reputational risk concerns when considering a tax strategy.
  • 75% of respondents would not enter into a legal tax planning strategy if it is perceived by some to be aggressive, even if the strategy is legal or the tax law did not specifically consider it illegal.

A renewed emphasis on the larger economies

  • China, India, Australia, Japan and Singapore are the top five jurisdictions in which many companies will spend the most time and resources on tax management in the next three years.
  • China and India have been the top two jurisdictions on the list since the first survey in 2010. This time, with expected tax law changes due to BEPS and ongoing business activities, Australia, Japan and Singapore have regained the spotlight from smaller frontier territories such as Guam, Mongolia and Myanmar three years ago.
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