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BEPS: Report on Advocating for Responsible Tax Planning and Management (video)

June 15, 2015 | Brett Weaver--international tax partner and tax transparency services lead for KPMG LLP (KPMG)--reviews the recently completed survey by CFO Research and sponsored by KPMG: Advocating for a Responsible Approach to Tax Planning and Management. Weaver highlights survey findings and outlines what finance executives should consider doing after reading the report. Visit KPMG's Base Erosion and Profit Shifting (BEPS): Tax Transparency site for more insights.


Brett Weaver: KPMG recently undertook a survey with CFO Research, an affiliate of CFO Magazine, to assess how companies are tax planning in today’s environment of global tax reform. Our objective was really to assess the internal and external forces which are affecting tax planning today, with a particular focus on the public eye, as the public is really looking at how companies are tax planning. This led to our report that we issued with CFO Research.

This is a very important topic for multinationals. As we've all witnessed, the public limelight, the perceptions of what companies are doing around global tax planning has only increased dramatically over the last couple of years. Corporate tax is essentially a mainstream news item. There's more and more interest from the public, from politicians in terms of tax planning in how large corporations go about their tax affairs.

In addition to these forces that are both political and from the common man, so to speak, we also have increased initiatives to enhance global transparency that will provide additional rulings and requirements for companies to provide more disclosures about their tax affairs.

We have, for example, the G20 and the OECD that recently issued their guidance as part of the BEPS action plan to provide country-by-country tax reporting. We also have the European Commission, who recently released their transparency package, which may even move what the OECD has done to a further element of public disclosure. There is some discussion about that, and we'll see where that goes.

These are just examples of additional initiatives and forces at play that are shining a light on what corporate companies, on what large multinationals are doing as far as their global tax planning. It's these issues that bring not only financial concerns, but reputation concerns to companies.

What are some of the key survey highlights?

There are a number of very interesting results that came out of the survey. Let me just walk through a few. We found that 78% of the respondents actively monitor their tax affairs in the media. We found this to be quite surprising, that many of the companies are actively engaged in seeing what the media is saying about their tax planning.

Another quite surprising result is that 63% of the companies who responded, their boards were actively engaged in discussions in considering tax morality in their tax planning at the board level.

Additional findings that were of interest is -- the same number, actually, 63% of companies were actively considering tax social responsibility issues as they develop their tax planning strategies.

And another item that I'll mention is that companies who responded about the issues that are most likely to impact their tax planning in the future, the number one issue that they selected is increased global transparency measures -- requiring companies to disclose their tax affairs on a country-by-country basis, and just generally where and how they pay taxes and how their tax affairs are structured.

What should finance executives do after reading the report?

Our hope, after reviewing the study, that finance executives and boards of directors will become even more engaged in the tax sustainability issues that confront their companies. This would not only include regular meetings, developing strategies about how the companies go about addressing these issues, but also developing both internal and external communication plans.

This would include things such as developing code of conduct around tax planning that of course should fit into the company's overall code of conduct.  So developing the approach to address this issue and providing clear guidance throughout the organization so that as companies have their tax departments, finance executives and even operations move forward in executing tax planning, that it's done so in accordance with a well-thought-out strategy that's in accordance with not only the corporate governance, but also a specific tax code of conduct.

"Tax sustainability is the notion of responsible tax planning, balancing social responsibility and tax costs to implement transparent tax planning that accounts for reputation considerations and endures over time."


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