International Tax Review is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Accounting & tax: The global and local complexities holding multinationals to account

Sponsored by

tmf-grouplogo.jpg
The COVID-19 pandemic has continued to put tax at the forefront

TMF Group reports on the global accounting and tax landscape, examining the growth of the digital economy and the impact of the COVID-19 crisis on markets worldwide.

Complying with local accounting and tax regulations is an ongoing challenge faced by businesses operating internationally.



The traditional, nexus-based taxation principles do not seem to apply in the new world, where physical flows are replaced by electronic flows and the tracking of goods and services becomes more complex. Consequently, corporate taxation has become a highly contentious topic in recent years. There has been increasing scrutiny on corporate approaches to international taxation, particularly in technology and e-commerce. Jurisdictions are also using taxation on foreign goods as a way of protecting their own economies, as has been seen in the US-China trade war.



The digital economy has become so significant for tax authorities that the OECD in July 2020 issued a global tax reporting framework for digital platforms in the sharing and gig economy, designed to help taxpayers comply with their tax obligations while ensuring a level-playing field with traditional businesses. Companies acting in this field are requested to provide detailed transactional information to tax authorities.



The COVID-19 pandemic has continued to put tax at the forefront, with changes introduced by governments to keep companies up and running and economies in motion. The global economic impact of COVID-19 will be long lasting and far reaching. As part of TMF Group’s reporting on the accounting and tax landscape, they also examined the impact of this crisis as the global economy continues to navigate uncharted territory.



In TMF Group’s Global Business Complexity Index (GBCI), three key themes summarise recent global trends:

  • Internationalisation versus localism with global standardisation harmonising some accounting and tax practices, while local complexities persist – and are even increasing – in some jurisdictions.

  • Modernisation versus tradition as global trends are based around a drive towards modern practices, whereas local considerations often reflect traditional modes of operation.

  • Technology’s role in fostering a globalised business environment and how this is being deployed and used for accounting and tax reporting around the world.


The five most complex markets:

 JURISDICTION 

RANK

 Argentina

 Bolivia

 Greece

 Brazil

 Turkey 

5


Drivers of complexity for the top five most complex accounting and tax jurisdictions are frequent, and rapidly enforced changes in legislation can often lack clarity and be challenging to understand. Another key driver is having varying tax regimes and multiple layers of tax regulations within a jurisdiction. This is particularly apparent in South America, which houses three of the five most complex accounting and tax environments.

The five least complex markets:

 JURISDICTION 

RANK

 Hong Kong SAR

73

 Switzerland

74

 Curaçao

75

 Denmark

76

 British Virgin Islands

77



The least complex jurisdictions for accounting and tax ‘partner’ with businesses that operate within them, establishing a relationship between companies and tax authorities. For some of the least complex jurisdictions such as Curaçao and the British Virgin Islands, there is very little requirement to pay tax as they operate a ‘low tax’ or ‘tax neutral’ economy. Any taxes that do need to be paid in the least complex jurisdictions can usually be submitted through an online portal via user-friendly systems. 



Read the full report here on TMF Group’s site



TMF Group

W: https://www.tmf-group.com/



more across site & bottom lb ros

More from across our site

Discussion on amount B under the first part of the OECD's two-pronged approach to international tax reform is far from over, if the latest consultation is anything go by.
Pillar two might be top of mind for many multinational companies, but the huge variations between countries’ readiness means getting ahead of the game now, argues Russell Gammon, chief solutions officer at Tax Systems.
ITR’s latest quarterly PDF is going live today, leading on the looming battle between the UN and the OECD for dominance in global tax policy.
Company tax changes are central to the German government’s plan to revive the economy, but sources say they miss the mark. Ralph Cunningham reports.
The winners of the ITR Americas Tax Awards have been announced for 2023!
There is a ‘huge demand’ for tax services in the Middle East, says new Clyde & Co partner Rachel Fox in an interview with ITR.
The ECB warns the tax could leave banks with weaker capital levels, while the UAE publishes guidance on its new corporate tax regime.
Caroline Setliffe and Ben Shem-Tov of Eversheds Sutherland give an overview of the US transfer pricing penalty regime and UK diverted profits tax considerations for multinational companies.
The result follows what EY said was one of the most successful years in the firm’s history.
The plan is aimed at simplifying tax rules and lowering tax compliance costs for cross-border businesses in the EU.