New tax landscape imposes burdens on corporate entities –PwC report
A new report by global consulting outfit, Price¬waterhouseCoopers (PwC), released on Monday has indicated that expanding com¬pliance burden, more audits and the potential for increased and double taxation remain key hurdles facing companies due to the rapidly evolving global tax landscape.
The report’s findings showed that the demand for greater tax transparency – reflected in the agendas and action plans of the Organisation for Economic Co-operation and Development (OECD), the G20, the European Union, and the United Nations –was placing more pressure on tax functions to better man¬age tax and related risks by strengthening the control en¬vironment that governs report¬ing processes.
According to PwC, overall, the tax function will need to expand its core capabilities re¬lating to risk management and governance, data, processes and technology.
Similarly, the consultancy reported that due to the poten¬tial business and reputational risks associated with many transparency initiatives, the tax function would need to be more engaged with the C-suite stakeholders about such issues.
The second part in PwC’s thought leadership series, Tax Function of the Future, ex¬plores predictions relating to global tax legislation and regu¬lation, as well as risk manage¬ment and how legislative and regulatory change will man¬date transformation.
Reflecting on the emerging trend, the Head of Tax and Regulatory Services at PwC Nigeria, Taiwo Oyedele, noted that companies were con¬cerned about the implications of disclosures of wider tax and financial information on a country-by-country basis could be potentially be misused by tax authorities, including pushing such information to public do¬main.
He clarified: “Companies are voicing concern over how disclosures of wider tax and fi¬nancial information on a coun¬try-by-country basis to tax au¬thorities will be interpreted and potentially misused, including the broader implications of such information ending up in the public domain.”
PwC identifies the most im¬mediate and sweeping initiative faced by tax functions to be the OECD’s Country-by-Country Reporting (CbCR) recommenda¬tion and template.
PwC stated : “CbCR will have a significant impact on the tax function and how it must engage with the wider organ¬isation to be ready for initial compliance, as well as meeting recurring annual obligations. Nigeria’s Federal Inland Rev¬enue Service have already indi¬cated their interest in adopting CbCR.
“Changes to the tax function will also be shaped by other pending initiatives under the OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan, as well as unilateral government actions that could upend exist¬ing international tax norms, including the requirement by certain territories for the dis¬closure of a company’s tax strategy.
“One cannot rule out the pos¬sibility of tax authorities in Nigeria, inspired by CbCR, re¬questing companies operating in different states across the country to produce “State by State Reporting (SbSR)”, espe¬cially with respect to employee taxes, VAT and Withholding Tax”, the consultancy added.
On options open to corporate tax payers, Oyedele advised that they should think differently and strategically to address these risks while proactively engaging with their broader or¬ganisation and potentially the public.
According to him, the time for companies to create a multi-year plan to expand their tax function capabilities, integrate new reporting requirements, and provide the business case for operational investments has become imperative now than ever.
He pointed out that “while risk and compliance obliga¬tions may be the main drivers for change, there may be several positive benefits to reap along the way – such as management having greater real-time busi¬ness insight due to enhanced access to information.
