Finance bosses terrified of tax shame

income

Finance executives around the world are increasingly scared of bad publicity from revelations that they have taken part in tax planning, fearing negative perceptions that they are working to reduce their tax bills, according to a study from advisory group Tax and. Its survey found 91pc of chief finance officers and tax directors  believe public exposure of tax planning has a negative effect on a company’s reputation.

That is up from 51pc five years ago and 77pc in 2015, indicating that public scrutiny of tax payments has had an impact on executives’ priorities. Tax and attributes the fears in part to the increase in rules forcing companies to publish the taxes paid in each country in which they operate – three-quarters of executives are concerned by that development.

“This concern, no doubt, is related both to the potential for competitors to gain insights into one’s corporate strategy through such information, but also to the potential for misunderstanding or misinterpretation of this information to confirm previously held erroneous beliefs,” said the advisory firm, warning that the publication of extra tax data may be “a dangerous thing”.

Public arguments between tax authorities and companies are alsodangerous for firms’ reputations, which Taxand claims is unfair.

“What would have previously been private collaboration with tax authorities is now too often being played out in a very public forum,” said Tim Wach, Managing Director at Taxand.

“Tax authorities are increasingly using the media to highlight their efforts to crackdown on multinationals, fuelling the public belief that multinationals are some sort of evil empire hell bent on evading tax.  This is simply not the case, as CFOs seek to understand what is reasonable tax planning and to execute their fiduciary duty to their companies and their shareholders.”

On the other hand, companies may well be better off in the near future as countries chop tax rates in an effort to create a more competitive, attractive business environment. The study found 81pc of finance chiefs expect tax competition to intensify, potentially reducing their bills.

By Tim Wallace

 

Posted on by CCKeith in Uncategorized
Switch to mobile version