7th Zurich Regional and Global Headquarters Conference Income tax accounting dealing with uncertainty and transparency

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Jocelin Wilkinson
5 years ago
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1 7th Zurich Regional and Global Headquarters Conference Income tax accounting dealing with uncertainty and transparency

2 Changing tax landscape Anti Tax Avoidance Directive Country by Country Reporting Treaty abuse Swiss Tax Proposal 17 Swiss-EU Automatic Exchange of Information (AEOI) Spontaneous Exchange of Tax Rulings Permanent Establishments BEPS Interest deductions Diverted Profits Tax US Tax Reform Licence capping rule Anti Avoidance Rules Publication of Tax Strategy 2

3 Why managing uncertainty and transparency is important Tax disclosures can influence our perception of a company. We differentiate between those that disclose and those that don t. We also wonder about those that seem to have aggressive tax policies it may indicate that they are aggressive in other areas too. Tax is an important input for our valuation of a company. The models use after-tax cash flows so we need to know whether there is a significant risk of challenge by the tax authorities so we don t get surprised. The most important and comprehensive source of tax information is the annual report. If a company puts its tax strategy somewhere else (e.g. on its website), it should at least cross-refer to those other sources. Tax can be an area we screen for when deciding whether to make an investment. If a company is silent, we will draw our own conclusions and may decide not to invest or to sell. More transparency can help us make better decisions. Investor View: What do investors want to see in company tax disclosures? See link 3

4 Dealing with uncertainty and its impact on your tax provision Certainty? In this world nothing is certain but death and taxes. (Benjamin Franklin) 4

5 Sources of uncertainty Unclear tax laws and rules Tax Status Transfer pricing Taxable? Deductible? Permanent Establishments And many more! 5

6 Issues addressed by relevant accounting standards (e.g. FIN 48 and IFRIC 23) When to recognise? Detection risk? Unit of account? CHANGE SAME How to measure? Changes in circumstances 6

Transparency to whom and for whom purpose? Transparency to whom and for what purpose? Stakeholder Why interested? What data? Disclose? Risk? Benefits?

7 Transparency to whom and for whom purpose? Transparency to whom and for what purpose? Stakeholder Why interested? What data? Disclose? Risk? Benefits? Would voluntary disclosure address a stakeholder interest? Could voluntary disclosures reduce risk or provide benefits? What are the risks and benefits of your mandatory disclosures? Who is interested in your mandatory disclosures? Why? Voluntary disclosure Risks and benefits of (not) disclosing? Decision on disclosure Mandatory disclosures Draft disclosures Are the disclosures understandable to the interested parties? Do the disclosures maximise benefit to the company and respond to the needs of stakeholders? How do the tax disclosures fit with broader messages on contribution and impact? Optimised disclosures Do you have the systems and processes to support your disclosures? 7

8 Transparency is key! Thank you This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers AG, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.. All rights reserved. In this document, refers to PricewaterhouseCoopers AG which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. 8

New format of the auditor s report

New format of the auditor s report New format of the audit report Auditor s opinion What the auditor s has audited identification of financial statements Audit approach: Audit scope Key Audit Matters How