This year's theme for International Women's Day on March 8
was "Press for Progress", an initiative that strives for gender
parity and inclusiveness at a time when the World Economic
Forum's 2017 Global Gender Gap Report says gender pay parity is
more than 200 years away. But, on the bright side, 2018 is also
the year celebrating the centenary of the UK Representation of
the People Act, when some women got the vote for the first
time. A lot of progress has been made since then, and the world
of tax is no different.
ITR's interactive one-day forum focused on US and
global tax and transfer pricing developments, with women from
across the Americas and Europe sharing their expertise. Topics
ranged from the US Tax Cuts and Jobs Act of 2017 to building an
effective corporate tax department, ethics, and how to develop
This opportunity to network and learn from industry thought
leaders was attended by more than 100 men and women.
US tax reform
When ITR began planning its first Women in Tax
event, US tax reform was just one of President Donald Trump's
ambitious proposals in his economic plan. Fast forward 11
months from his inauguration and tax reform has been enacted.
This overhaul of the country's tax code is on the mind of every
international tax professional. With the new rules affecting
the 2017 financial statements of companies operating in the US,
the need to understand the changes is immediate.
I loved the format of the forum. The panel discussions
with an open conversation was fluid and kept me engaged
throughout each session. Overall, all panellists were
well spoken and added value to each topic
Kristin Mikolaitis, tax controversy and litigation partner
at Mayer Brown in New York, opened the forum with a look at
this big change. She was joined by her colleague Ana Luiza
Martins, tax controversy partner in Sao Paulo, and Manal
Corwin, national leader for international tax at KPMG in the
US. Offering her perspective, Radhika Narain, vice president of
international tax at News Corp in New York, was also on the
Besides a run through of the key measures affecting
multinationals, the leaders shared their views on whether the
US has actually moved to a territorial system – one
panellist said she believes the US continues to operate on a
worldwide tax system – and how some of the provisions
can be interpreted.
Although the alternative minimum tax has been eliminated
under the new rules, the base erosion and anti-abuse tax (BEAT)
is causing some concerns as a limited scope alternative minimum
tax, the women said.
US and foreign companies are subject to the BEAT, which will
apply to certain deductible "base erosion payments" made to
related foreign companies. The rate charged will increase over
the years as follows:
- 5% for tax years beginning in 2018;
- 10% for tax years beginning in 2019-2025;
- 12.5% thereafter.
However, the panellists reassured the audience that not all
companies will need to worry about the BEAT, as it applies to
taxpayers with average annual gross receipts over a three-year
period of at least $500 million and a base erosion percentage
for the taxable year of at least 3% (2% for certain
The women warned, however, that in the case of an M&A
transaction, the purchasing company should be mindful of the
BEAT threshold when combining receipts with its acquired
Taxpayers will need to determine which payments may be
considered as "base erosion payments" under the BEAT, the
The BEAT is not the only cause for concern. Section 951A, on
the tax on global intangible low-taxed income (GILTI), is a
The GILTI imposes a minimum US tax on the income derived by
a US shareholder's controlled foreign corporations (CFCs). In
applying the GILTI provision, a US shareholder must go through
subpart F, expense allocation, the foreign tax credit regime
and, therefore, earnings and profits computations.
The GILTI applies to CFCs for tax years beginning after
December 31 2017. US shareholders must include as income all
non-exempt and non-subpart F income annually as GILTI for the
Mikolaitis and her fellow panellists noted, however, that
deductions are available. A US company can deduct up to 50% of
the GILTI included in gross income for tax years beginning
before December 31 2025. Thereafter, a company can deduct up to
37.5% of its foreign-derived intangible income (FDII) for the
What taxpayers want now is guidance. It is inevitable that
the Internal Revenue Service (IRS) will provide some guidance
on the provisions, but there is no timeline for when this may
happen (see this month's cover story on page 18). Some
practitioners expect guidance on the GILTI to come first, in
the coming weeks. However, the panellists believe this guidance
will predominantly take the form of regulations.
But the issuance of guidance could be stalled because of
resource constraints in the IRS, as well as personnel changes,
and questions about the role of the Ombudsman in reviewing
With so much uncertainty comes risk. Without guidance,
taxpayers may be forced to make an educated guess when
implementing certain provisions. However, this could lead the
IRS to question their approaches. Taxpayers need to be prepared
to defend their positions should an audit arise and be prepared
to deal with any subsequent penalties, the panel said.
Tax controversy won't stop with just the IRS, however.
Taxpayers in the US need to consider the tax consequences of
the new international provisions in foreign jurisdictions, as
early reactions from the OECD, EU and the US's treaty partners
are mixed. The panel also anticipates some challenges from the
World Trade Organisation.
Managing your disputes
With US tax reform posing more risks of tax controversy,
managing tax and transfer pricing disputes was what attendees
to the forum needed to know.
Larissa Neumann, tax partner at Fenwick & West, chaired
a panel on this with her colleague Julia Ushakova-Stein, a tax
attorney. They were joined by Lucia Fedina, transfer pricing
director at CBRE, and Débora Corréa Talutto,
senior global transfer pricing manager at Temenos.
Most taxpayers would agree that documentation is important
evidence in audit situations.
To prevent transfer pricing audits, however, companies
should be "transaction specific" and "detailed" in their
documentation, which should be in line with their financial
statements, said the panel.
To tell a "compelling story", it is important to build a
file containing written inter-company agreements, interviews
with prospective employees and their agreements with the
company (if appointed), meeting agendas, logs that detail
progress and workings, and contemporaneous transfer pricing
These reports should describe the transaction and relevant
functional information, select the best method to test the
transaction, and support that the transaction is at arm's
Transactional agreements should describe the terms of the
transaction, document that the legal entities agreed to the
terms and, similar to TP reports, ensure there is supporting
evidence to prove the transaction is at arm's length.
No matter what approach a company takes, it is important to
be consistent. To avoid appearing inconsistent, companies
should ensure only final documents are included in audit files,
while draft versions are stored elsewhere.
The onset of country-by-country reporting (CbCR) in line
with BEPS Action 13 makes the need for a consistent approach
even more important. But the panellists warned that while a
policy is required on these documents, some thought should be
given to local country requirements for master and local files,
such as India. Preparing CbC reports for tax authorities is not
enough, however. Although public CbCR has not yet been enacted,
these reports should be prepared with tax transparency in mind.
The likelihood of public CbCR has grown in recent years and
companies need to be prepared in case it becomes a reality.
These preparations are just some of the steps companies are
taking to get ready for the post-BEPS era.
Great conference! Adding the 'softer’
issues made it so very interesting
Catherine O'Meara, tax partner at Matheson, led a panel
examining the challenges and opportunities of the 'post-BEPS
world'. Along with her co-panellists Diane Gardner, vice
president of tax and treasury at Kodak Alaris, Margriet
Lukkien, tax partner at Loyens & Loeff, and Erika Yumi
Tukiama, partner of direct tax at Machado Associados, O'Meara
reviewed the changing landscape.
On the agenda was the global implementation of the BEPS
action points, the OECD report on digital taxation, and the
impact of transfer pricing on financial transactions. On the
topic of the EU, the panel discussed the Anti-Tax Avoidance
Directive (ATAD), CFC rules, general anti-avoidance provisions,
tax rules to tackle hybrid mismatches and the unilateral
measures some countries are taking. The topics of state aid
cases and the common consolidated corporate tax base (CCCTB)
were also discussed.
The ATAD will be mostly effective from January 1 2020 once
member states have transposed it into domestic legislation.
However, certain provisions on hybrid mismatches will be only
be phased in as late as January 1 2022.
Next to US tax reform, the ATAD will lead to the clean-up of
many corporate structures, such as CV-BV structures, within the
next few years, according to Pieter Frolichs, senior associate
at Atlas Tax Lawyers.
But it is the CCCTB and Brexit concerns that are looming.
While the French government supports taxing the revenue of tech
companies rather than their profits, in order to make tax
avoidance much more difficult, the German government believes
the CCCTB is the way of taxing the profits of online
businesses. With the new German coalition in place, the
proposals for a CCCTB will stay firmly on the EU agenda
– even if Ireland disagrees.
The UK's anticipated departure from the EU also poses its
own risks for taxpayers, as noted by the panel. The move poses
questions on trade, tax and employment, but it is also
unilateral measures such as the diverted profits tax that
continue to create headaches.
What kind of leader are you?
While six of the eight sessions at the forum where focused
on technical tax matters, it was a panel chaired by Kathleen
Russ, tax partner at Travers Smith, that took the
Russ, alongside her colleague Elena Rowlands, a tax partner,
as well as Katie Newman, senior tax counsel at Apollo Global
Management, Nancy Nelson, tax director at Interactive Brokers,
and Sviatlana Bitsiuk, a tax director at Prometric, shared
their experiences of tax leadership.
In this panel, and a later session on working your way to a
chair at the boardroom table, there was advice on embracing
influence, power and running a successful tax department, as
well as finding your leadership style and becoming a powerful
champion and supporter of other women.
Women on the panel and throughout the room shared their
experiences of balancing a challenging job with personal
aspirations and responsibilities.
How do you manage your job and have a family when they both
conflict? "You make yourself irreplaceable," one woman said.
"If you are highly valued by your company, they will find a way
to support you," said another.
Taking ownership of your career was a key theme of
Also, having a mentor, whether in your organisation or
outside, can provide you with the tools necessary to deal with
such circumstances. If the mentor is in the same industry, they
are likely to be able to relate to your situation.
Genevieve Moore, partner and head of corporate tax at Blick
Rothenberg, recommends that any aspiring businesswomen seek
advice, mentoring and coaching from their role models, whether
they be women or men. "Whilst I have benefited hugely from
working with many inspiring and talented females, it is the
coaching and mentoring from our current (male) CEO that has
really enabled me to grow and strive to reach my full
potential," she said in a recent article published on the
Fiona Fernie, tax risk and dispute resolution partner at the
same firm, said: "My advice to young women would be to
determine their goals early on, believe in themselves and what
they have to offer, find someone influential who will mentor
and help them, and then work with dedication towards achieving
Ultimately, the advice to young tax professionals was to
determine which aspects of their jobs they really love and find
a role that allows them to succeed in that area.
For those taking on leadership roles, the advice was to not
to try to be a man. Be yourself, and tailor your management
style to your personality and the needs of your team and
"People were scared to come to talk to me," said one
panellist. "Apparently, I was viewed as unfriendly and stern,"
[I liked] being in a room full of strong business women
and hearing about their experiences
So what's caused this? "I felt like I had to be more firm
because I was a women leading the team. Men don't have that
problem," said one forum attendee. Another said they couldn't
find the right balance between being someone's boss when they
were previously their equal and their friend.
But you need to find your own approach, the panellists
responded. Advice was shared across the room on how to adapt,
with many individuals at the forum saying it takes time to find
Jo Maughan, who left the tax profession in 2014 to become a
career and leadership coach to tax and finance professionals,
sums it up well in a recent article written by Reshma Johar in
the Taxation Journal. "It is easy to focus on developing skills
but it is essential to build self-awareness to progress
– use judgment, influence, networks and relationships.
It is not just about whether you can do the job, it is more
[about] whether you can persuade people to believe that you are
the right person to lead an area. Think about the impact you
have on others and, more importantly, the impact they have on
you. Each of us has learned to behave in a particular way and
it is about unpicking these behaviours to become more
Working your way to a chair at the boardroom table is
difficult for women, but the opportunities are growing. Many of
the attendees of ITR's Women in Tax Forum are leaders
in their fields and highly regarded by their peers –
both male and female.
This year's International Women's Day campaign may focus on
gender parity and inclusiveness, but ITR's Women in
Tax Forum showed how the tax sector is embracing women as
leaders and succeeding in developing some brilliant