Skadden, Arps, Slate, Meagher & Flom LLP
The drive towards greater tax transparency has continued in 2017. The trend is driven by pressure on tax authorities to raise more revenue and increasing public disquiet about the well-publicised practices of some large multinationals and wealthy individuals, who apparently pay a disproportionately small sum in tax compared to the man in the street. Measures focus on stricter financial reporting and more rigorous compliance standards, coupled with a variety of attacks on tax avoidance and offshore structures.
One consequence of this is that business management, particularly boards of multinational companies, will need to focus more on tax matters and accept that more resources will need to be devoted to compliance and providing information to tax authorities than in the past. Tax authorities and governments expect that their approach will result in more tax being collected and bring about a change in corporates’ tax practices. At this stage, one cannot predict with any certainty how business will respond, in particular whether those based in high-tax jurisdictions with increasingly onerous compliance burdens, may seek to relocate to jurisdictions with lower tax rates and a less expensive and time-consuming compliance obligations.
A challenge for the tax adviser in the coming years will be to engage with general
business management, who have traditionally delegated tax matters to specialist departments, to make them aware of the challenges the new environment throws up and their obligations.