Tax compliance in global context. Transfer pricing as part of Tax Governance

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1 Tax compliance in global context Transfer pricing as part of Tax Governance - Challenges and opportunities in tax compliance perspective - 4 th December Forfatter, 2015 underskrift Troels Kjølby Nielsen Emne mm Carsten Ibsen

2 Challenges and Opportunities depend on The Companies The Tax Authorities The Tax Advisors Profitable business selling goods and services Collecting taxes 1,000 bndkk per annum Tax advises 2

3 Testing the Compliance set up SKAT must look outside in and not inside out The Business The Annual Report Taxes Tax Governance / Enhanced Relationship is one of the tools used by the Co.s and SKAT to ensure Compliance Probably the best in the world.... in some circumstances, but not in all.. 3

4 Systems, tools and data Organisation, resources, capabilities Tax Control Framework The Tax House Tax Strategy Tax Corporate Governance Tax Policy, procedures and guidelines Tax Planning Tax Reporting Tax Accounting Tax Compliance Tax Audit and other enquires Tax Risk Management Communication Other tax operation tasks PwC Tax function of the future 4

5 Systems, tools and data Organisation, resources, capabilities Building blocks for a Tax Control Framework Tax Corporate Governance Tax Policy, procedures and guidelines C7: Effective IT controls Tax Planning Tax Strategy C1: Tax Statement approved by Board Tax Reporting C2: Formalised Roles and Responsibilities C3: Tax Policy describing overall tax operating principals C4: Periodic internal control testing to ensure effective the tax operation Tax Accounting Tax Compliance C8: Capacity and capability Tax Audit and other enquires Tax Risk Management Communication Other tax operation tasks C5: Establish a Tax Risk Register and procedures for escalation of risk C6: Formalised plan for internal and external communication of Tax Matters PwC Tax function of the future 5

6 The Danish Tax Governance Programme Includes all taxes including Transfer Pricing in 30 large Co.'s. The programme is tailor-made per Co. Includes a set up with a Single-point-of-entry in both the Co. s and SKAT and a close dialogue between the people The Co and SKAT perform a common risk evaluation The control is primarily a test - QA - of the procedures and internal control and thereby less time consuming and it s updated The control is secondary a substantive test of the transactions which is often time consuming The Co has to invest in a Tax Control Framework 6

7 The basic challenge Tax rules vs the Business The Business The tax rules 7

8 The basic challenge in a changing world The tax rules 8

9 Tax Governance - next steps The Danish Programme is improved currently based on surveys and feedback from the large Co.s, the trade organisations, the tax advisors and SKAT It is the considered to implement a toolbox the Tax Control Framework implement a fast track responding the Co. s Improve the procedure in order to handle conflicting tax rules - e.g. different deadlines implement best (TG) practice from other countries 9

10 Tax Governance including Transfer Pricing Summary The Tax Governance Programme in Denmark gives some challenges, but.. The overall conclusion is that it works well also within Transfer Pricing - when the tool is used by the A-team Tax Governance is The New Standards within the A-team 10

11 Tax Administration of the Future (voluntary) Codes of Good Tax Conduct and Good Tax Governance Regulations will limit freedom of maneuver of MNO s in the field of tax. Pull out of an important statistic goes in this area 16pt Georgia 20% (white) Pre-described self assessing software for VAT & personal taxes will become mandatory. Real time auditing by tax authorities getting access to MNE s administrations (in cloud) will become the norm. Under pressure of politics and tax administrations BIG 4 firms will have to spin of their tax advice services increasing costs of compliance (returns and audit of tax). Third party tax assurance by regulated tax compliance providers will become a new feature in the global tax compliance world. Tax administrations expect that information technology general controls for tax will be managed by IT- and auditing specialists more than by tax specialists, changing the face of tax departments for good. Multi-territorial single audits by tax administrations will become common use. One supervising governmental body will be comparing data filed for multi compliance purposes (tax, national banks, stock exchange committees, intrastate etc.) which will be mirrored by MNE s in multi compliance service centers. EMEA Tax Academy PwC November