All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

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

This week Brazil’s former President Luiz Inacio Lula da Silva came out in support of uniting Brazil’s consumption taxes into one VAT regime, while the US Senate approved a corporate minimum tax rate.
The Dutch TP decree marks a turn in the Netherlands as the country aligns its tax policies with OECD standards over claims it is a tax haven.
Gorka Echevarria talks to reporter Siqalane Taho about how inflation, e-invoicing and technology are affecting the laser printing firm in a post-COVID world.
Tax directors have called on companies to better secure their data as they generate ever-increasing amounts of information due to greater government scrutiny.
Incoming amendments to the treaty could increase costs on non-resident Indian service providers.
Experts say the proposed minimum tax does not align with the OECD’s pillar two regime and risks other countries pulling out.
The Malawian government has targeted US gemstone miner Columbia Gem House, while Amgen has successfully consolidated two separate tax disputes with the Internal Revenue Service.
ITR's latest quarterly PDF is now live, leading on the rise of tax technology.
ITR is delighted to reveal all the shortlisted firms, teams, and practitioners for the 2022 Americas Tax Awards – winners to be announced on September 22
‘Care’ is the operative word as HMRC seeks to clamp down on transfer pricing breaches next year.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree