Tax control frameworks: an international perspective
Tax control frameworks (TCFs) are increasingly seen as an essential tax management and compliance tool for businesses of all sizes. Around the world, tax authorities are taking a stricter approach to taxation matters. At the same time, organisations like the OECD and the EU are introducing new guidelines and regulations to strengthen corporate compliance, including international taxation frameworks.
Taxation is also increasingly under the spotlight as part of the heightened focus on ESG factors (environmental, social and governance) when monitoring and assessing corporate performance.
What is a tax control framework, or TCF?
TCFs are a step-by-step roadmap for ensuring an organisation’s tax risks are known and controlled, that tax matters are managed efficiently and transparently, and that the company and its senior executives are protected from the risks of non-compliance.
Crucially, these benefits not only apply in a company’s own domestic market, but also in any international markets it operates in. In fact, for companies that operate in one or more foreign markets, each with their own taxation regimes, the tax risks are likely to be higher, and the need for a tax control framework even greater.
Global network of TCF expertise
This is why, at Forvis Mazars, we have strengthened our global tax practice by introducing a cross-border tax control framework capability. This means that no matter where in the world a company is based or which foreign markets it is active in, it can leverage our global TCF expertise to gain total peace of mind over its taxation affairs in all the markets where it is present.
So, for example, a company headquartered in the Netherlands that has a subsidiary in Brazil, can work with us to develop a tax control framework that considers Dutch, Brazilian and international taxation standards. Or maybe a company in Singapore wants to do business in Spain. With the support of our global network of TCF specialists, it can develop a framework to manage their taxation matters in compliance with the relevant regimes in both countries, as well as with international taxation frameworks, such as OECD and COSO guidelines.
Forvis Mazars expertise includes TCF teams over 50 key jurisdictions, including China, Malaysia, USA, Brazil, Argentina, Nigeria, South Africa, UAE, India – and we regularly share knowledge and best practices between our network of TCF specialists across the globe. This helps to ensure, among other things, that understanding, and insights gained in a market with a higher level of maturity in tax compliance matters are shared with colleagues in other markets.
It also means that, in the Dutch example above, the Brazilian subsidiary can be kept up to date with the evolving taxation regime in the Netherlands, which, under Dutch taxation regulations, it has to comply with, as well as in its own domestic market.
Snapshot of TCF priorities
To further support companies around the world in strengthening their tax management affairs, we have launched our ‘TCF Quick Check’ tool. This provides an initial overview of the maturity of the tax processes and structures in an organisation and highlights any potential risks and weaknesses. As well as identifying priority areas for action, it can form the basis for follow-up discussions with one of our global TCF leaders.
By developing and continually enhancing our global TCF capabilities, our aim is to reassure companies that no matter where they are based, by working with Forvis Mazars they receive the same high level of expert TCF guidance and support, tailored to their local regime but also fully in line with global frameworks and expectations.
Discover more on how a tax control framework solution can benefit your business by visiting our dedicated TCF homepage, which has a collection of resources to support you on your tax journey.
Enhancing business sustainability through effective tax control frameworks
Sustainability challenges have become critical business imperatives in recent years. Regulators, stakeholders, investors, employees, customers – all expect a much higher degree of compliance and transparency. Businesses have got used to their performance in these areas being monitored and to being held accountable for any weaknesses. Although much of the focus on ESG (Environmental, Social […]
Tax transparency on allocation of group profits in the light of Public CbCR
Taxation has a key role for medium and large multinational companies in the process of developing a sustainable business model. Disclosure of complex tax information and transparency on profit allocation to group entities is key to this transformation process and will become a reality with new reporting standards and EU disclosure obligations. The Global Reporting […]
Occasional and temporary provision and notification of services in Luxembourg
Companies established in a country of the European Union may undertake occasional and temporary activities in Luxembourg. Though such activities do not constitute a permanent establishment in Luxembourg, there are still certain formalities that need to be complied with such as: The notification of services is valid for 12 months and can be renewed […]
Italy – Extension of participation exemption (PEX) regime to non-resident (EU/EEA) companies/entities
The Italian Budget Law (Law issued on 30.12.2023, No. 213 – “Legge di Bilancio 2024”) established that Italian-source capital gains realised on disposal by EU or EEA resident entities without an Italian PE, where the disposal is of a substantial participation in an Italian company meeting certain conditions, will benefit from the participation exemption (PEX) […]
How much do you really know about your Pillar 2 disclosure obligations?
With jurisdictions still in the process of enacting local tax law to introduce Pillar 2 Global Anti-Base Erosion (GloBE) rules, groups in scope of the new regulations could be forgiven for taking a watch-and-wait approach. However, a general lack of awareness of how the rules impact entities is also hindering much-needed communication between the C-suite, […]
Navigating the tax implications of remote work in Canada
As the working environment adapts to offer more flexibility with remote working options, understanding the tax nuances of cross-border remote working is becoming increasingly crucial. More than ever, employers are offering their teams the opportunity to work abroad for limited periods each year. Whether you’re a non-resident considering remote work in Canada, or an employer […]
Romania prepares to enact Pillar 2 Global Anti-Base Erosion (GloBE) rules
Initiated by the Organisation for Economic Co-operation and Development (OECD) the Pillar 2 GloBE rules aim to stop tax competition between countries and to limit the shifting of profits to low-tax jurisdictions. As a result, large multinational groups (MNEs) with global annual revenue exceeding €750m will need to pay a minimum 15% tax on income […]
ESG from Transfer Pricing Perspective
This article analyses the impact of ESG on MNE tax management with a special focus on transfer pricing and business restructuring. Tax Management and ESG As stated by the UN, environmental social and corporate governance (ESG) is not only an issue that concerns individuals but also a strategic priority of multinational enterprises (MNEs), investors and […]
French landmark decision on the “beneficial owner” concept for tax treaty purposes
A landmark decision on beneficial ownership could significantly impact the French tax authorities’ approach to tax audits concerning royalties. In its decision on French company Sté Planet dated 20 May 2022, the French Administrative Supreme Court (Conseil d’État) ruled for the first time that when French-sourced royalties are paid to a foreign person who is […]
New CEE tax guide outlines fundamental changes and long-term trends
Providing information on taxation in 22 Central and Eastern European (CEE) states, the latest Mazars CEE tax guide analyses long-term taxation trends and fundamental tax regime changes in each country, both now and in previous years.
The Google tax: The UK story, 7 years later
The Diverted Profits Tax (DPT), or what the media have dubbed the Google tax, was introduced in 2015 to dissuade and counteract contrived arrangements used by large multinational groups that divert profits from the UK and erode the UK tax base.
Are you ready for the GloBE tax challenges?
On 14 March 2022, the OECD published a comprehensive commentary and illustrative examples of how implementing the Global Anti-Base Erosion Model Rules (GloBE rules) could look. In this blog, we discuss the GloBE rules and examine how the rules apply and filing requirements. On 20 December 2021, the OECD published model rules that member countries […]
French landmark decision on foreign tax credit imputation for capital gains on shareholdings: an extension to dividends?
In a decision “Air Liquide” dated 15 November 2021, the French Administrative Supreme Court (Conseil d’Etat) ruled for the first time that French resident companies realising capital gains upon the alienation of eligible participation (titres de participation – generally presumed for a 5% interest held for a minimum two-year period) in a foreign company are […]
The proposed new EU “Unshell” directive
On 22 December 2021, the European Commission published a number of Directives impacting a wide variety of corporate structures and taxpayers. One of these Directives is “laying down rules to prevent the misuse of shell entities for tax purposes and amending Directive 2011/16/EU’’, commonly referred to as ATAD3 or the Unshell Directive (see here) (hereinafter […]
Corporate income tax changes in Poland for 2022
As of January 1, 2022, significant changes concerning the Polish tax system called the Polish New Deal came into force. These amendments also include Corporate Income Tax (CIT). Changes in withholding tax The major changes concern: Implementation of pay and refund mechanism (mechanism introduced in 2019 and suspended until the end of 2021) as the basic mechanism of […]
MNEs subject to 15% minimum tax rate from 2023: main OECD provisions and EU implementation proposals now available
The OECD two-pillar approach In October 2021, the OECD’s 137 Inclusive Framework members agreed to adopt a two-pillar approach to address the tax challenges of the digital economy. Pillar I provides for new profit allocation and nexus rules for MNEs with a turnover greater than EUR 20 billion and profit before tax margins of 10% […]
The Anti-Tax Avoidance Directive II: Will other jurisdictions follow the UK’s lead?
ATAD II is the EU translation of BEPS Action 2, the part which is focused on the ability of taxpayers to design situations of double non-taxation or heavily reduced taxation by exploiting hybrid mismatches. They apply to mismatches between the EU Member States, the UK, Mexico, Australia, New Zealand, and third countries. This legislation has […]
Tax updates in the context of the digital economy
Key milestones are being reached in the digital economy in 2021. In this post, we review the most recent legislation and provide insight on how to keep up with the tax aspects of this fast-developing topic. Digital commerce is increasing globally as the world becomes ever-more interconnected. More and more companies are exclusively active in […]
Is the new two-pillar solution to address tax challenges suitable for African countries?
This new solution is expected to reallocate more than $100bn of profit annually to market jurisdictions. However, this raises the question, to what extent emerging economies, and more specifically, African countries, will be entitled to levy taxes on profits generated by multinational enterprises from their markets? This source and others are sorely needed by these […]
Tax issues arising from corporate amalgamations in Hong Kong
In June 2021 Hong Kong finalised legislation codifying the Inland Revenue Department’s tax assessment practice relating to corporate amalgamations. For qualifying companies, it is possible to elect (within one month of the amalgamation) for special tax treatment for pre-amalgamation losses, succession to business assets, amongst other areas. While the new legislation provides greater certainty on […]
Switzerland is an attractive business hub. What is their secret?
Choosing a business location involves many considerations, with tax being only one of them. Nevertheless, tax is a consideration. Below is a note commenting on the attractions of Switzerland as a business location. There may of course be other locations that should be considered. Switzerland attracts global business, research, and innovation, and maintains the high ground […]
Tax aspects of opening a business hub in Asia
The Asian Development Bank has forecast that developing Asia’s growth is forecast to rebound to 7.3% in 2021 and 5.3% in 2022. This compares to 4.2% and 4.4% respectively for Europe (see here) and 6.9% and 3.6% for the US (see here). Businesses already with a footprint in the Asian region will be gearing up their operations to deal with the region’s expected […]
Migrants and refugees have employment rights and obligations in Uruguay
As Covid restrictions begin to lift there will inevitably be increased movement of workers across borders. This brings back into focus a range of global mobility and tax considerations for businesses and individuals. Examples include work permits, visas, payroll and social security amongst other issues. Below is a snapshot of some pints concerning Uruguay to […]
Special Purpose Acquisition Company (SPAC) – Is this tax vehicle a blank check?
Is it a bird? Is it a plane? Why is a SPAC considered a ‘high flying’ concept and what tax issues need to be considered to reap the benefits and avoid the pitfalls of a SPAC transaction? In this article, we provide a brief overview of SPACs, the particular tax issues relevant to the US […]
The new great debate: minimum global corporate income tax?
The new U.S. Secretary of Treasury, Janet Yellen, has garnered this week’s tax spotlight with her support and request for the world to support a minimum global corporate income tax. This would apply to the largest and most profitable businesses (numbering around 100), with the suggestion that the minimum rate to be applied to be […]
How to attract private capital to fund the new American Jobs Plan?
On March 31, 2021, the Biden administration released The American Jobs Plan, which detailed, among other critical items, the need for infrastructure improvements to enhance America’s competitiveness and to create well-paid American jobs. For this to be successful in attracting needed private capital, the existing regulations concerning Real Estate Investment Trusts (REIT) and Foreign Investment in […]
Tax reclaim opportunities regarding withholding taxes in Germany
As a result of a number of recent cases there are tax reclaim opportunities for non-German investors in German companies that have suffered withholding taxes (WHT), subject to meeting certain conditions. Points to consider A complete or partial WHT relief may now be possible: i) where there is no Double Taxation Treaty (DTT) in place […]
Governmental proposal for redraft of German “Anti-Treaty Shopping Provision”
Background On January 20, 2021, the German government published a draft law for the Gesetz zur Modernisierung der Entlastung von Abzugsteuern undder Bescheinigung der Kapitalertragsteuer (Act for modernization of the relief of withholding taxes and the certification of capital gains tax, AbzStEntModG). Among other things, this draft contains a new wording proposal of the so-called “Anti-Treaty Shopping” provision in Sec. 50d (3) German Income Tax Act (ITA), in order to comply with European law requirements. Sec. 50d (3) […]
New German tax developments regarding intellectual property (IP)
Decree of the Federal Ministry of Finance dated 11 February 2021 – Remuneration of the temporary transfer and the disposal of rights which are entered in a German public register. Further information on German tax developments relating to intellectual property (IP) registered in Germany has been released by the German Authorities. This helps to clarify how the German taxing right can apply to non-German users or vendors of this IP. This […]
Changes to interest deduction limitation rules
The EU Anti-Tax Avoidance Directive (ATAD), contains five legally binding anti-abuse measures, which all EU member states are required to apply against common forms of aggressive tax planning. The Directive includes an exit tax, a general anti-abuse rule, controlled foreign company rules, measures to tackle hybrid mismatch arrangements, in addition to an interest limitation rule. We […]
Corporate income tax reform: tax loss relief limited to 50% of annual profits
The Dutch government has provided further details concerning a potential reform of the tax loss relief rules in the corporate income tax regime. The proposed amendment will mean that losses can be set off indefinitely from 1 January 2022, but the number of losses that can be set off will be capped. The government had […]
The UK fiscal environment for international business following Brexit
Following the UK’s spending review statement of 25 November, there is now greater clarity on how the UK economy will be taken forward into 2021 following the Covid-19 pandemic and exit from Brexit transition. Despite incurring record UK government borrowing this year of around £395bn, the significant further borrowing to fund investment during the recovery […]
French landmark decision fighting against “commissionaire” arrangements in the digital economy
After the French government enacted a 3% digital services tax on gross income, it is now the French Administrative Supreme Court which rendered a landmark decision for international groups providing digital services in France by strongly extending the definition of permanent establishment in the presence of commissionaires. This new case law remains also relevant for […]
DAC6 tightens the reigns on M&A deals across the globe
EU Directive 2018/822 or DAC 6 (acronym of “Directive on Administrative cooperation”) is in the minds of many European tax practitioners. In this article we will set out its importance for the European M&A market. Beyond this mysterious acronym, the European Union is pursuing its efforts to prevent tax fraud and tax evasion (and thus create legal and business ” fairness […]
ICAP 2.0 – A solution to aggressive tax audits for MNEs during Covid-19
Governments damaged by the Covid-19 pandemic are likely to be taking a more aggressive approach in tax field audits on multinational enterprises (MNEs), at least until after their respective economy is on its way to recovering from the impacts of the pandemic. The OECD launched a pilot of the International Compliance Assurance Programme (ICAP) on […]
The future of joint tax audits beyond Covid-19
The current restrictions imposed by multiple countries to combat the Covid-19 pandemic have limited the possibilities for conducting external tax audits. However, the current pandemic and its consequences for the world economy highlight again that the number of internationally active companies is increasing. This has a significant impact on the future of tax audits. Coordinated […]