Deloitte Survey: Multinational companies believe there is a shift in global taxation and the approach of tax audits

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Deloitte Survey: Multinational companies believe there is a shift in global taxation and the approach of tax audits

Most representatives of multinationl companies believe that the global fiscal model is in a process of reset on different principles and the approach of fiscal authorities during fiscal audits is getting harsher, according to a global survey published by Deloitte in August 2017.

At the fourth edition this year, the survey analyzes and sums up the answers of 460 tax directors and finance professionals representing 38 countries regarding the impact of the plan against  Base Erosion and Profit Shifting - BEPS. Romania became an associate member of BEPS at the beginning of June 2017.

"We have noticed that as BEPS gets implemented in more and more jurisdictions, companies continue to focus on internal preparations in order to adjust to the new provisions. Romania was not included in this survey but we are working on a local survey and a summary of the results will be published shortly. Our intention is to see the impact of these measures at local level, both in terms of local legal changes as well as following the measures taken by parent companies which affect their local subsidiaries”, Dan Badin, Tax and Legal Partner-in-Charge Deloitte Romania said.

The main conclusions of the survey (OECD’s BEPS initiative and „the Global Tax Reset”) are:

  • 94% of respondents agree or strongly agree that the additional transfer pricing reporting requirements resulting from the OECD BEPS recommendations will substantially increase their corporate tax compliance burden;
  • 91% of respondents agree or strongly agree that tax structures implemented today are under greater scrutiny by tax administrations now, than they would have been a year ago;
  • 93% of respondents agree or strongly agree that tax authorities will, irrespective of any actual legislative changes, increase tax audit assessments as a result of the current BEPS debate;
  • 86% of respondents agree or strongly agree that their organization has assessed the potential impact of changes related to BEPS;
  • 89% will result in fiscal legislative and fiscal treaties changes in many states
  • 96% the jurisdiction with low taxation will be under greater scrutinity of the fiscal authorities 

“Though it is a topic with strong political connotations all over the world, the global tax reset of multinational companies relies more on the realities of a more and more digital and global economy. As usual, companies are one step ahead of the states in adopting innovation, technology and consumer trends. Therefore, states have initiated an intensive global plan to catch up with the latest developments of the business environment", added Dan Badin.

The impact of the 15 actions of the BEPS plan will impact Romanian companies on two main plans. On one hand, the tax authorities will focus more on analysing the economic substance of the transactions and less on their shape. On the other hand, the fiscal transparency increases. For this reason, the Romanian tax authorities will have access to the financial and tax information of all entities part of a group that parent companies report in their jurisdiction, including information about their branches / permanent headquarters in Romania.

"The Romanian tax authorities will have more and more detailed information to use for fiscal audits. At the same time, Romanian taxpayers have to analyse the business structure to ensure that they comply with the new rules. They also have to pursue more strictly the way corporate profits are taxed, depending on the place where economic activities take place. According to the global survey, tax professionals say that the rapid pace of implementation of the BEPS plan during the past year was suprising. The global trend will affect Romania as well", Dan Badin concluded.

Base Erosion and Profit Shifting Report