Patrick Ellingsworth, the Chairman of the marcus evans European Tax Summit 2011 addresses some of the many issues troubling tax directors in Europe.
Interview with: Patrick Ellingsworth, Former Chair Taxation Committee, BIAC-OECD, Trustee, IBFD
Montreux, Switzerland, January 11, 2011 – FOR IMMEDIATE RELEASE
Complexities and opportunities seem to multiply constantly when it comes to tax. Trying to address an ever changing tax environment, changing regulation and legislation, and pressures to be more transparent and commercially viable are taxing taxation executives. Patrick Ellingsworth, the Chairman of the marcus evans European Tax Summit 2011 in Montreux, Switzerland, 13 – 15 March, shares his thoughts on the challenges facing tax executives, how they can minimise their exposure to tax risks and the latest developments in transfer pricing.
What are the top tax risks in Europe?
Pat Ellingsworth: A major risk relates to the increased coordination of tax authorities. This is impacting the exchange of information practices between countries, but also, the tax authorities are exchanging information about tax planning techniques and how taxpayers have been structuring their businesses to minimise taxes. The exchange of information and coordination of techniques has made it more difficult for taxpayers to know what works and what does not.
The principal technique for dealing with this is to engage actively with tax authorities, to know what concerns them and what matters they are coordinating on. When there is a dispute they will know how to approach and resolve issues, and what areas authorities are likely to focus on in an audit. Exchange of information with tax authorities is generally a good idea, as long as the tax administration is forthcoming with respect to their perspective as well.
The other risk is what I call the “US risk”; the US has for a long time had very detailed tax rules on just about everything, and that practise has been taken up by a number of other jurisdictions in Europe. The tax authorities are each adding their variation to the rules, and as a result, taxpayer planning across borders is more complex and somewhat less certain.
What are the major developments in transfer pricing at the moment?
Pat Ellingsworth: The major one is the broad reconsideration of the taxation of intangibles, brands and the like. It is not clear how this will turn out, but more coordination among tax authorities is inevitable. Another development is the increased emphasis of tax authorities on documenting transfer pricing positions in advance. Adjustments have been proposed by tax authorities solely on the grounds that the taxpayer did not file the documentation at the time the audit commenced.
What are your projections for the coming few years?
Pat Ellingsworth: Two areas are going to be major topics for discussion, one relating to permanent establishments and whether or not taxable in the other countries, and if they are, what is the computation of the income. The OECD has two major projects dealing with this and companies will have to adapt practises to deal with any new rules.
The second area is value added tax; Europe is finally looking at whether cross-border rules are coordinated and efficient. This is especially welcome for some companies, as value added tax is a very expensive proposition and the ability to administer it more efficiently would significantly improve cost structures.
Contact: Sarin Kouyoumdjian-Gurunlian, Press Manager, marcus evans, Summits Division
About the European Tax Summit 2011
This unique forum will take place at the Fairmont Le Montreux Palace, Montreux, Switzerland, 13 – 15 March 2011. Offering much more than any conference, exhibition or trade show, this exclusive meeting will bring together esteemed industry thought leaders and solution providers to a highly focused and interactive networking event. The summit includes presentations on how to respond to the changing tax environment, business restructuring, averting double taxation and achieving true tax efficiency.
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