Representatives of most multinational companies believe that there is a radical global change in both tax and tax control. Accordingly, the global tax model is undergoing a process of alignment with other principles, and the approach of the tax authorities during controls becomes stricter, a survey by Deloitte published in August shows.
In its fourth edition, the study analyses the input of 460 financial directors, tax managers and other tax specialists in 38 countries on the impact of measures in the plan against base erosion and profit shifting – BEPS. Romania became an associated member of the BEPS at the beginning of June 2017.
“We are noticing that, as the BEPS is implemented in several jurisdictions, companies continue to focus on internal training to adjust to the new provisions. Romania was not included in the global questionnaire, but Deloitte Romania has launched a local study whose synthesised (anonymous) results will be published shortly. Our intention is to see the impact of these measures at the local level, both in terms of Romanian tax legislation changes and as a result of the measures taken by the parent companies affecting the subsidiaries in Romania,” said Dan Badin, Deloitte Romania tax and legal services coordinator.
The main conclusions of the study are: 91 percent of respondents believe that the tax structures currently in place are under a stricter control of fiscal authorities compared to last year. 94 percent of respondents agree that additional reporting requirements in the transfer pricing area will substantially increase the administrative compliance burden as a result of BEPS recommendations. 93 percent agree that the authorities will stress, regardless of the legislative changes, on the analyses for fiscal controls as a result on the current BEPS debate. 86 percent agree that their organisation assessed the potential impact of changes connected to the BEPS. 86 percent agree that the BEPS initiative will result in legislative changes and of fiscal treaties in several countries. 96 percent agree that tax authorities will exert a greater control on the operations in jurisdictions with lower lax levels.
“Although it is a highly politicized subject all over the world, global corporate tax reform relies more on the realities of the economy that is increasingly globalised and digitised. As usual, companies are one step ahead of states in adopting innovation, technology and consumer trends. Therefore, the states have initiated a concerted global plan that modifies the taxation to get the latest developments in the business environment, “ Dan Badin said.
The impact of the 15 actions will be felt by Romanian companies on two main levels. Firstly, the tax authorities will stress even more the analysis of the economic component of transactions at the expense of their form. Secondly, fiscal transparency will increase. That is why, Romanian fiscal authorities will have access to financial and tax information of all entities within a group that parent companies report in their jurisdiction, including their permanent branches in Romania.
“The Romanian fiscal authorities will have more information and in more detail that they will be able to use during checks. Moreover, the Romanian tax payers must analyse the business model to make sure they are in line with the new regulations. Also, they should pursue more strictly the way corporate profits are taxed, depending on the place where economic activities take place. Globally surveyed tax professionals have said that the rapid pace of implementation of BEPS provisions took them by surprise in the past year. It is expected that the global trend will affect Romania,” Dan Badin concluded.