Tax

Global Norming

The United States is one of only four countries now active in every major effort to reform global tax laws, according to a recent report by E&Y.
Kayleigh KarutisJune 28, 2007

For global companies, taxation offers a strong dose of good news/bad news. “Complexity and asymmetry across jurisdictions,” says a recent report from Ernst & Young, present “problems for an increasing number of companies and can result in traps for both the wary and the unwary.” That’s the bad news. The good news is that the United States is one of only four countries now active in every major effort to reform global tax laws. While the specific goals and charters of these efforts vary, in the aggregate they promise to bring more simplicity, transparency, and cooperation to bear, eliminating problems such as double taxation, inconsistent enforcement, and tax-shelter abuse. Participation in these efforts should bear fruit by year-end, says Michael Mundaca, principal of international tax services at E&Y. The Joint International Tax Shelter Information Centre, in particular, has already helped the Internal Revenue Service identify what it calls “abusive transactions” that otherwise would have escaped its notice. Some companies won’t see that as a victory, of course, but most will benefit as tax enforcement migrates from a wildly inconsistent local affair to a more normalized product of international cooperation.

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