Majority of businesses want more tax guidance – even if it means paying more tax
The vast majority of businesses would welcome more global cooperation and guidance from tax authorities on what is acceptable and unacceptable tax planning, even if this provided less opportunity to reduce tax liabilities across borders, according to the latest research from the Grant Thornton International Business Report (IBR), a quarterly survey of more than 3,000 businesses in 44 countries.
The IBR reveals that two-thirds (68%) of businesses would like more tax guidance. However, there was a marked divergence between regions with 75% of eurozone businesses eager for more guidance compared to just 54% of their North American counterparts. Similarly businesses in Latin America (85%) are more likely to look for advice compared with peers in Asia-Pacific (67%).
Francesca Lagerberg, incoming Global leader of Tax at Grant Thornton, said: "Reducing liabilities across borders can offer significant tax savings so it is interesting to see how open business leaders are to improving guidance and global cooperation. In the UK, recent high-profile cases involving Amazon, Google and Starbucks have certainly sharpened public opinion as to what is acceptable tax planning. It seems the majority of business leaders would also welcome more transparency."
Business leaders are also critical of what the tax regimes in their economies are set up to achieve. Just 31% globally said their local tax laws and policies were geared to stimulate economic growth, with the heavily-taxed Nordic nations a surprisingly satisfied exception (41%). Senior executives in Southern Europe (11%) and Latin America (23%) were particularly scathing.
Moreover, 49% of business leaders believe their current tax regime does not bring enough economic participants into the tax base, although there was a large divergence of opinion here between G7 businesses (63%) and their BRIC peers (17%). A further, 41% of businesses do not believe their tax regimes are sufficiently redistributive, led by those in North America (54%).
Francesca Lagerberg, added: "Tax is a cost to businesses in its simplest form so it is perhaps unsurprising to see few associate it with economic growth. Moreover, many mature economies around the world are undergoing severe fiscal retrenchment and business leaders are seeing taxes rise even as growth remains flat.
"However, that businesses feel taxes are too regressive and that not enough people and entities are being taxed is perhaps more surprising. It suggests that business leaders would be supportive of changes to the global tax system that would level the playing field."
The IBR also reveals that just two in five business leaders plan to make their own tax affairs more transparent over the next 12 months. This is true of just 25% of G7 businesses compared with 68% of BRIC peers perhaps reflecting the different stages of tax system development the two groups of economies find themselves in and the local pressure in parts of the world to encourage greater openness in relation to tax.
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Notes to editors
The Grant Thornton International Business Report (IBR) provides insight into the views and expectations of more than 12,500 businesses per year across 44 economies. This unique survey draws upon 21 years of trend data for most European participants and 10 years for many non-European economies. For more information, please visit: www.internationalbusinessreport.com
Data collection is managed by Grant Thornton International's core research partner -Experian. Questionnaires are translated into local languages with each participating country having the option to ask a small number of country specific questions in addition to the core questionnaire. Fieldwork is undertaken on a quarterly basis. The research is carried out primarily by telephone.
IBR is a survey of both listed and privately held businesses. The data for this release are drawn from interviews with 3,194 chief executive officers, managing directors, chairmen or other senior executives from all industry sectors conducted between January and February 2013.