Speaking on tax matters, Carmel O'Connor, Tax Partner PwC noted that "Over the past year or so, corporate tax has become a matter of significant public interest. People are concerned, during difficult economic times, about where tax revenue is coming from and that everyone is paying their "fair share". Governments and regulators, perhaps on the strength of public opinion, have what is termed 'aggressive tax planning' in their sights."
Internationally co-ordinated efforts are underway. In December 2012, the European Commission published an 'action plan' for a more effective EU response to tax evasion and avoidance, in the recognition that 'unilateral solutions alone won't work'. This was followed in February this year by the OECD's report on "Addressing Base Erosion and Profit Shifting" and, with political backing from the G8 and G20, an action plan on measures arising from that report is expected in July.
Historically, multilateral tax changes whether at OECD or EU level have been difficult to agree and implement, because of individual countries protecting their own legitimate tax interests. However, in the current economic climate, with pressures on public revenues, the question is whether the political will could exist to seek to agree on certain common actions to achieve at least greater co-operation between tax authorities and, potentially, greater convergence between national tax systems.
Carmel O'Connor concluded:
"What is clear is that companies doing business across borders cannot ignore these developments in setting and articulating their tax strategy - pressure for companies to be more transparent in relation to their tax affairs will increase, and this will require a policy which is capable of being explained by executives and Boards alike."
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