Recently I returned to San Francisco from a three week trip to Ireland and a lot had changed! Brexit had come as a shock, adults all over the world were engrossed in Pokemon Go and on a personal note, I had gotten married – big changes!!!
Over the last decade the pace of change in the global environment has been staggering and in a lot of cases technology has acted as a catalyst to this disruption. As the world economy has shifted and transformed itself, the international and domestic tax rules have not kept pace and have remained insulated from this rate of change – however, the tax world is now also feeling the “Uber” effect and this status quo has been disrupted!
The OECD Base Erosion and Profit Shifting (BEPS) project and recent EU corporate tax reform represent two of the most comprehensive changes to the international tax landscape in 120 years. In talking to and advising US companies over the last few months, it is clear that the changes resulting from both projects will impact the way these companies operate, how they expand globally and access new markets, and how much financial information they will need to disclose publicly – a challenging prospect for those who are unprepared!
I have found that by tracking, understanding and developing an action plan for the emerging changes in the international tax landscape, business leaders can control the impact of the changes on their global corporate tax strategy and indeed, in many cases, companies I work with have identified opportunities amidst the uncertainty.
To begin to do this, I think there are a number of questions which businesses should ask themselves:
- have we quantified the impact of the international tax changes under the BEPS project or EU tax reform? If not, how can we do that - and how soon?;
- is our current corporate tax structure and strategy sustainable? Do we need to make commercial/operative changes to our business model to ensure it is in line with the new tax requirements?; and
- does the wider business operation understand the implications of these tax changes and how tax needs to be considered when making commercial and operational decisions going forward?
For international businesses with operations in Ireland or considering establishing operations in Ireland, these questions are vitally important. As we all know, Ireland’s tax regime is aligned with developments internationally and can offer companies a transparent, compliant and competitive regime. As companies consider the implications of the changes in the tax world, I have seen more and more companies turning to Ireland as a strategic base for European operations based on our pro-business environment, low corporate tax and skilled workforce.
We are helping companies understand the impact of the changes in the international tax landscape on their business operations and working with them to consider their options and strategy.
Change isn’t always a bad thing, it's how you adapt to change that defines how successful you will be. Let me know if you have any questions!