Tax professionals rank UK as the second most attractive European economy
26 November 2014
- UK and Netherlands rank as the most attractive European economies to operate in from a tax perspective;
- 49% call for more certainty about the future of the tax system;
- Just over half of respondents think the base erosion and profit shifting (BEPS) project is important to their tax department (51%) but 65% think it is not important to their organisation's leadership.
A report by Deloitte, the business advisory firm, finds that over 800 European tax professionals rank the UK and the Netherlands as the most attractive economies to operate in from a tax perspective*.
Once again respondents cite the Netherlands as the most attractive economy**, followed closely by the UK. They praise the UK’s competitive tax regime and the UK’s tax authority for its transparency and ease of compliance. They commend the Dutch tax authorities for their responsiveness, ease of communication, accessibility of information and clear and simple procedures which respondents feel favours entrepreneurs and economic growth.
Factors that could increase competitiveness
Nearly half (49%) of the respondents say that simplifying the tax system would have a great impact on competitiveness, closely followed by more certainty around the future (48%) and 28% stress the importance of a very predictable and collaborative tax authority***.
James Wright, tax partner at Deloitte, says: “Tax professionals want stable tax legislation as they believe it will have the most positive impact on their country’s commercial competitiveness. They do not like uncertainty and they suggest simplifying the tax system would also make their own countries more competitive.”
Challenges they faced doing business in Europe
The majority of respondents (54%) think one of the main challenges they face is a high degree of tax uncertainty in their own country. This group refers to frequent changes to legislation (39%), ambiguity, weakness and reversals in the tax authorities’ doctrine of publicly available guidance (28%), and the long duration of tax disputes (12%) as the main challenges****.
Tax professionals’ response to OECD changes
When asked whether the BEPS project was important to their tax department, just over half (51%) say that it was important or very important. Over half of the UK respondents
(57%) say they had started planning to deal BEPS and of those who had started planning, half had taken steps to ensure they meet the new requirements.
Wright adds: “There is major change coming soon with the G20’s objective of providing comprehensive, balanced and effective strategies for countries concerned with base erosion and profit shifting and this inevitably adds further uncertainty even if the goals of the G20 are well understood.
“The BEPS project will affect companies in most countries. For example, 80% and 65% of companies in the UK and France, respectively, think it is important to their tax department. However, overall our findings suggest that some respondents did not think it was important to their tax department, which is surprising. It is also surprising that just 35% think it is important to their organisation’s leadership and 69% have not yet started planning for the likely impact. Of those who have started planning for BEPS, half have taken steps to meet the new compliance requirements for transfer pricing documentation, and 11% for hybrids. Only 47% acknowledge that BEPs will have an effect on their tax strategy and recognise that it will probably increase the cost of compliance.”
Tax in the spotlight
More than half (56%) of respondents think there have been increased levels of discussion and scrutiny around corporate tax strategy, especially from shareholders. The majority of respondents have not been asked by external (77%) or internal stakeholders (60%) to justify their tax strategy.
The west of Europe thinks that tax is more in the spotlight than the respondents in the east of Europe. In Western Europe, 81% of the UK, 80% of French respondents and 74% of the Netherlands think that tax is under more scrutiny now. This compares to Eastern Europe and Southern Europe, where it is not on the agenda. For example 86% of Bulgarian tax directors did not think tax was more of an issue now, than last year.
Notes to editors
*The report surveys European tax professionals from 814 large companies, from 29 countries across Europe between September and October 2014. Most favourable major economies from a tax system perspective, ranked from 1 to 7, 1 being the most favourable.
** They were cited as the most attractive economy to operate in 2013.
*** The question asked was as follows:
What change(s) to your country’s tax legislation do you think would have the greatest positive impact on your country’s commercial competitiveness?
**** The question asked was as follows:
Do you think there is a high degree of tax uncertainty in your country (in which you are based)?
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
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