CEOs call for urgent reform of international taxation to boost economic growth

Taxation and Corporate Reputation Report, prepared by PwC

65% say that "it does not correspond to the current way of doing business."

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Presidents and CEOs around the world are calling for a urgent reform from the international taxation that drives the economic growth and recovery.

This is reflected in the report. Taxation and Corporate Reputation, produced by PwC based on its global survey of CEOs and the tax opinions of 1.344 senior executives from 68 countries—including Spain. 65% of top executives agree that international tax regulations have not evolved, do not reflect current business practices, and need a thorough overhaul. This perception is particularly prevalent among executives in Western countries, such as Germany, -82% -, United States -81% -, Australia -79% -, Spain -77% -, United Kingdom -73% - and France -66%-.

 

According to the managers, this lack of adaptation has a double consequence for the multinational companies and directly impacts their reputation and growth. The first concerns the public debate about how much tax these large corporations should pay and where, and the potential impact on their image and perception. 75% of the CEOs They consider it very important that it is known that their companies pay the taxes they owe, and 59% go further and are in favor of publicly breaking down their tax contribution in each of the countries in which it operates. (In Spain, this percentage rises to 77%). Furthermore, a majority of senior executives—58% globally and 85% in Spain—consider it appropriate for tax authorities worldwide to share information about companies.

 

In this sense, it stands out among the large multinationals –74%– the trend of measuring and disclosing their tax contribution to the societies in which they operate –as some large Spanish companies already do, such as BBVA o InditexThis practice goes beyond simply publishing taxation on profits and includes other concepts such as indirect taxes, social security, tariffs, etc.

 

50% of the world's top executives - 52% in Spain - indicate that creating a more efficient and competitive global tax system is among their top three demands for their governments. 

 

 

 

 

Secondly, this divergence between international business and tax systems is posing a barrier to company growth and recovery, according to those surveyed. Seventy percent of CEOs say that the increased tax burden—understood not only as the amount of taxes paid but also as the complexity of complying with tax obligations—is one of the main obstacles to their companies' growth.

 

Fifty percent of the world's top executives—52% in Spain—indicate that creating a more efficient and competitive global tax system is among their top three demands of their governments, and 80% acknowledge that tax issues have gained prominence on their agendas in the last twelve months. In fact, 63% of CEOs state that the competitiveness of tax systems is a highly relevant factor when deciding on growth markets for their businesses.

 

In the summer of 2013, the OECD received the mandate from the member countries of the G-20 to lead a coordinated reform of international tax systems. An initiative that has been very well received by top executives worldwide, who, however, are quite skeptical about its final outcome. Only 27% believe that G-20 members will be able to reach a consensus in the immediate future that would allow them to establish a new international tax framework that boosts international trade and adapts to new ways of doing business.

To Alberto Monreal, partner of PwC Tax & Legal Services"The principles that should guide this reform should be the simplification and harmonization of regulations; the promotion and pursuit of greater competitiveness that enhances the internationalization of companiesand the establishment of legal mechanisms that provide confidence and security in the application of the law. Furthermore, in the event of conflicts, there should be mechanisms in place that allow for their swift and consensual resolution.”