Confidence in times of change

On the minds of tax leaders

In this latest survey, we have asked tax leaders about several key topics of interest to the business tax community, including:

• Pillar Two implementation
• Increased tax transparency, including voluntary standards and EU legislative measures
• Tax administration and tax disputes
• International remote work and environmental taxation
  

	Pillar Two is expected to happen and businesses are preparing for the impact • 85% expect that a critical mass of countries will implement an Income Inclusion Rule under Pillar Two by 2025 or earlier. • 81% expect that a critical mass of countries will implement an Undertaxed Profits Rule under Pillar Two by 2026 or earlier. • 34% expect that Pillar One / Pillar Two will result in a significant increase in their group’s global effective tax rate. • 67% of respondent groups do not expect that the implementation of Pillar Two will cause them to make significant changes to their corporate structure. • 56% have done at least some kind of modelling of the impact of Pillar Two on their tax profiles. • 62% are somewhat confident that they will have readily available tax and accounting data necessary to comply with Pillar Two.
	Stakeholder interest in tax will continue to increase but is becoming the new normality • 75% expect some level of increase in stakeholder interest in tax behavior and outcomes of large corporates over the next three years. • 56% have a neutral response to the continuing interest of media, political and activist groups in corporate taxation. • 41% agree or strongly agree that it requires significant resources from the tax function to respond to media, political or activist groups in corporate taxation. • 67% agree or strongly agree that the C-suite and/or Board of Directors are actively engaged in establishing and/or approving their group's tax strategy and in assessing and monitoring risk in this area.
	Tax administration and tax disputes remain high on the corporate agenda • 25% agree or strongly agree that most tax administrations are interpreting the OECD Transfer Pricing Guidelines in a consistent manner. • 40% agree or strongly agree that the tax authority in their ultimate parent’s jurisdiction has become more rigorous in tax examinations in the last 12 months, while 42% are neutral. • 60% of respondent groups remain concerned about the lack of guidance from tax authorities around the world about the principal purpose test. • 41% of respondent groups are interested in joining a cooperative tax compliance program where available, and 11% have already joined or are in the process of joining such a program.
	Tax transparency standards and strategies feature widely but many plan to keep within standard financial reporting • 54% expect their group to align its external communication in relation to its tax performance with a transparency standard. • 40% have an up-to-date tax transparency strategy for their group, which has been tested with the senior leadership. • 37% do not expect any kind of communication with stakeholders beyond standard financial reporting over the next year.
	EU tax transparency proposals will affect many respondent groups, and BEFIT is not expected to simplify compliance • 65% reported arrangements under EU Mandatory Disclosure Regime to one or more tax authority in the EU since the directive came into force. • 65% expect to report in line with the EU public country-by-country reporting directive within the next three years but limited to where they are required to report. • 47% considered the impact of the EU Unshell Directive proposal but have not made any changes yet. • 65% do not expect that the proposed EU single corporate tax rulebook (BEFIT) will simplify corporate tax compliance for their group in the EU.
	Respondent groups are considering environmental taxation and international remote work • 54% are planning to change their policies or already have processes in place to accommodate international remote work. • 78% expect the impact on their group, of permanent establishment issues related to the increasing trend towards remote working to be small or moderate. • 39% have started to analyze the impact of environmental taxation on their business and operations.

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	Tax governance remains high on the Board’s agenda • 77% agree or strongly agree that their group is concerned about the continuing high interest of media, political and activist groups in corporate taxation. • 66% agree or strongly agree that the C-suite and/or Board of Directors are actively engaged in establishing and/or approving their group's tax strategy and in assessing and monitoring risk in this area. • 41% of respondent groups are interested in joining a cooperative tax compliance program where available, and 18% have already joined or are in the process of joining such a program. • 85% of respondents expect an increase in stakeholder interest in tax behaviour and outcomes over the next 3 years.
	Voluntary tax transparency standards are increasingly being adopted by businesses • 60% of respondents expect their group to align its external communication in relation to its tax performance with a transparency standard. • 33% of respondents expect to increase their level of voluntary tax transparency over the next year. • 42% of respondents have an up-to-date tax transparency strategy for their group, which has been tested with the senior leadership. • 55% of respondents expect that a tax transparency strategy for their group has been or will be set up within 12 months.
	Pillar One / Pillar Two remains a ‘hot topic’ and businesses are preparing for the impact • 59% of respondents expect that a critical mass of countries will implement Pillar One / Pillar Two by 2024. • 55% of respondent groups have been actively engaged in OECD’s Pillar One /Pillar Two project consultation either directly or through other channels. • 47% expect that Pillar One / Pillar Two will result in a significant increase in their group’s global effective tax rate. • 62% does not expects that the implementation of Pillar Two will not cause groups to make significant changes to their corporate structure. • 46% of respondents have a very rudimentary analysis of the impact of Pillar Two on their tax profiles. • 55% are somewhat confident that they have readily available tax and accounting data necessary to comply with Pillar Two. • 25% of respondents expect that U.S Senate will pass a treaty to implement Pillar One by 2023.

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	Tax governance remains high on the Board’s agenda • 74% of respondents are concerned about the media coverage, political and activist group interest in corporate taxation, and 79% expect such interest to increase following COVID-19 pandemic. • 76% of Boards are actively engaged in tax governance, this has remained high over the years.
	Taxation of the digital economy remains a ‘hot topic’* • 41% of groups have been actively engaged in the OECD’s Pillar One / Pillar Two project consultation either directly or through other channels. • 62% of groups are concerned that a possible outcome of the OECD’s Pillar One / Pillar Two project will be an increase in their corporate tax liability. *these responses were provided before significant progress was made by the OECD Inclusive Framework / G20 on achieving a high level consensus on Pillar One / Pillar Two.
	Cross-border coordination has room to improve • Only 23% of tax leaders agree that most tax administrations will interpret the changes to the Transfer Pricing Guidelines in a consistent manner. • 57% of groups are concerned about lack of guidance from the tax authorities around the world about the Principal Purpose Test (PPT).
	Businesses are slowly securing additional resources to deal with BEPS-related changes • Despite the unprecedented degree of change in the tax laws worldwide, only 32% of organizations have secured (or plan to secure) additional resources / headcount for their tax group. • Only a quarter of respondents (24%) have or intend to co-source or outsource some tax group functions due to BEPS-related changes. • Increased investment in tax-related technology appears more prominent; 47% have increased their investment in technology to cope with the volume of BEPS-related changes.

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	Tax governance remains high on the Board’s agenda • 71% of respondents are concerned about the media coverage, political and activist group interest in corporate taxation, and consequently, the involvement of C-suite in organizations’ tax strategies has also remained consistently high over the years • 60% of companies have implemented additional corporate policies and procedures in response to the increased scrutiny related to corporate taxation
	Taxation of the digital economy remains a ‘hot topic’ • 44% of respondents expect a global consensus on taxation of the digital economy that will lead to changes • 31% of tax leaders have been actively engaged in the OECD’s Pillar One/ Pillar Two project consultation • More than half of respondents (62%) are concerned that the OECD’s Pillar One / Pillar Two project may lead to an increase in their corporate tax liability
	Cross-border coordination has room to improve • Only 23% of tax leaders agree that most tax administrations will interpret the changes to the Transfer Pricing Guidelines in a consistent manner • 57% of groups are concerned about lack of guidance from the tax authorities around the world about the Principal Purpose Test (PPT)
	Businesses are slowly securing additional resources to deal with BEPS-related changes • Despite the unprecedented degree of change in the tax laws worldwide, only 32% of organizations have secured (or plan to secure) additional resources/headcount for their tax group • Only a quarter of respondents (24%) have or intend to co-source or outsource some tax group functions due to BEPS-related changes • Increased investment in tax-related technology appears more prominent; 47% have increased their investment in technology to cope with the volume of BEPS-related changes.

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Research scope

The survey was conducted between January 12 and February 7, 2023. More than 200 tax leaders from multinational companies across 28 countries responded to the survey.

In this latest survey, we continued to explore the respondents’ views on the progress of the OECD’s Pillar One and Pillar Two measures and the impact on their business while also looking into the topics that were high on their agenda in 2023, such as EU legislative proposals, international remote work and the continued focus on Environmental, Social, and Governance matters.