U.S. Tax Day Is Over, But International Tax Issues Loom

Executive Director External Affairs and CFO at IFAC overseeing communications, public policy and finance functions.

The deadline for filing U.S. tax returns has come and gone, but for global businesses, Tax Day doesn't end there. Disparate international tax practices remain the cause of much debate and consternation among multinational corporations and individuals.

The issue of international taxation is sparking discussions around the world about what constitutes fair taxation. Yet, the concept of fairness and even taxation itself mean different things to different nations. In some countries, taxpayers are incentivized to take a legalistic view of taxation and employ tax avoidance strategies that teeter just within the boundaries of the law. In other jurisdictions, taxpayers are expected to look at the intent of the tax provision and comply with the intent rather than the letter of the law.

As a significant number of governments move in the direction of protecting national boundaries, competition for investment from multinational corporations incentivizes the development of different tax options based on national economic priorities. This could mean that countries become more tempted to offer low or no corporate income tax regimes to attract more business.

 

Effective taxation in the globalized, digital economy calls for policymakers to work together -- and across borders. However, citizens are ultimately the ones who will shape their government’s ability to see international tax system reform implemented. Frequent news headlines and political discussions on the ethics of tax avoidance have given the public a better understanding of corporate tax avoidance and its consequences.

Over the last several years, businesses whose tax behavior is perceived to be inconsistent with public sentiment have found themselves the subjects of public scrutiny. Yet, competition between jurisdictions persists. For corporate taxpayers, this leads to a complex, disjointed and often highly political international tax environment. For private citizens, it leads to an erosion of public trust in tax administrations.

This post was taken fromForbes.There is no involvement of Nepal Tax Online in preparation of this post.

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