What are tax leaders’ top priorities today? According to Deloitte’s Global Tax Policy Survey 2023, Pillar Two, tax transparency, international remote work and environmental taxation are tax leaders’ top priorities at multinational companies.
Survey results reveal that 56% of respondents have done at least some kind of modelling of the impact of Pillar Two on their tax profiles and 54% expect their group to align its external communication in relation to its tax performance with a transparency standard, Deloitte said.
The survey was conducted between January 12 and February 7, 2023, with a target audience of tax directors and managers from multinational companies, according to Deloitte, adding that 206 people from 28 countries responded to the survey on tax leaders’ top priorities.
Survey highlights
Pillar Two is expected to happen and businesses are preparing for the impact
• 85% expect that a critical mass of countries will implement an Income Inclusion Rule under Pillar Two by 2025 or earlier.
• 81% expect that a critical mass of countries will implement an Undertaxed Profits Rule under Pillar Two by 2026 or earlier.
• 34% expect that Pillar One / Pillar Two will result in a significant increase in their group’s global effective tax rate.
• 67% of respondent groups do not expect that the implementation of Pillar Two will cause them to make significant changes to their corporate structure.
• 56% have done at least some kind of modelling of the impact of Pillar Two on their tax profiles.
• 62% are somewhat confident that they will have readily available tax and accounting data necessary to comply with Pillar Two.
Stakeholder interest in tax will continue to increase but is becoming the new normality
• 75% expect some level of increase in stakeholder interest in tax behaviour and outcomes of large corporates over the next three years.
• 56% have a neutral response to the continuing interest of media, political and activist groups in corporate taxation.
• 41% agree or strongly agree that it requires significant resources from the tax function to respond to media, political or activist groups in corporate taxation.
• 67% agree or strongly agree that the C-suite and/or Board of Directors are actively engaged in establishing and/or approving their group's tax strategy and in assessing and monitoring risk in this area.
Tax administration and tax disputes remain high on the corporate agenda
• 25% agree or strongly agree that most tax administrations are interpreting the OECD Transfer Pricing Guidelines in a consistent manner.
• 40% agree or strongly agree that the tax authority in their ultimate parent’s jurisdiction has become more rigorous in tax examinations in the last 12 months, while 42% are neutral.
• 60% of respondent groups remain concerned about the lack of guidance from tax authorities around the world about the principal purpose test.
• 41% of respondent groups are interested in joining a cooperative tax compliance program where available, and 11% have already joined or are in the process of joining such a program.
Tax transparency standards and strategies feature widely but many plan to keep within standard financial reporting
• 54% expect their group to align its external communication in relation to its tax performance with a transparency standard.
• 40% have an up-to-date tax transparency strategy for their group, which has been tested with the senior leadership.
• 37% do not expect any kind of communication with stakeholders beyond standard financial reporting over the next year.
EU tax transparency proposals will affect many respondent groups, and BEFIT is not expected to simplify compliance
• 65% reported arrangements under EU Mandatory Disclosure Regime to one or more tax authority in the EU since the directive came into force.
• 65% expect to report in line with the EU public country-by-country reporting directive within the next three years but limited to where they are required to report.
• 47% considered the impact of the EU Unshell Directive proposal but have not made any changes yet.
• 65% do not expect that the proposed EU single corporate tax rulebook (BEFIT) will simplify corporate tax compliance for their group in the EU.
Respondent groups are considering environmental taxation and international remote work
• 54% are planning to change their policies or already have processes in place to accommodate international remote work.
• 78% expect the impact on their group, of permanent establishment issues related to the increasing trend towards remote working to be small or moderate.
• 39% have started to analyse the impact of environmental taxation on their business and operations.
