TRENDS IN LARGE-SCALE CORPORATE TAX DISPUTES: WHAT TO EXPECT IN 2023
The beginning of the year is often a time for thinking about what the coming months may bring. In the corporate tax world, change on a grand scale is afoot with the introduction of the Organisation for Economic Co-operation and Development’s (OECD’s) Pillar 2 proposals for a global minimum rate of corporate tax. That will throw up many compliance issues and transactional complications to keep tax teams busy planning for the future.
But they may also be faced with tax authority challenges to historic tax positions, and it can be useful to anticipate the areas in which those may arise. Some particular themes we are tracking in the coming year are set out below.
Pressure to raise more tax
The world economy is under tremendous strain, with many economists predicting a global recession in 2023. Governments under pressure often look to ‘big business’ to fill revenue gaps in their budgets, and inbound investors in particular can find themselves in the firing line. In 2022, we saw a wave of tax rate rises, windfall taxes and aggressive positions being taken by tax authorities in tax audits and assessments, and we expect more of the same in 2023. This is not just an issue for lower-income countries – high costs of borrowing and inflation have created intense economic and political pressure for finance ministers across the globe. Taxpayers are also facing the pinch, and so may be less willing to settle and more inclined to fight their corners.
Apr-Jun 2023 issue
Freshfields Bruckhaus Deringer LLP