Tax risk growing worldwide, finds EY

MORE THAN four in five companies expect already-heightened tax risks to accelerate over the coming two years, EY has found.

A survey of 830 tax and finance executives in 25 countries, including 44 respondents from the UK, found companies view the potential lack of co-ordination by national governments around the OECD’s Base Erosion and Profit Sharing (BEPS) project as a major risk.

In particular, the risk of double-taxation arising from limited co-ordination on BEPS and potential unilateral actions by nations was a concern raised by almost a third of businesses.

That sentiment was echoed by around a third of British companies.

“International companies share the OECD’s concern that coordinated action by national governments is necessary to ensure any BEPS-related recommendations are productive.” said EY head of tax policy Chris Sanger. “The OECD can play an invaluable role in preventing what it has called a ‘global tax chaos’ that results in double taxation and increased controversy by pressing for common approaches and consistent standards.”

Away from the OECD, 68% reported that they feel tax audits have become more aggressive in the last two years, up from 57% in 2011 when the survey was last conducted. The news media has also been an even bigger driver of tax-related reputation risk, with 89% of the largest companies concerned about news media coverage of taxes, up from 60% three years ago.