Thomson Reuters Tax Survey: Increased tax transparency may not deliver desired outcomes

SYDNEY, 25 November 2013 – The tax directors at leading companies in Australia and New Zealand say the push by governments and authorities to drive new levels of transparency in tax reporting and regulation will require additional resources and investment in technology. However, less than half believe this push will help overcome some of the challenges being experienced in relation to transfer pricing, base erosion and profit shifting. These findings form part of a survey released today by Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals.

A total of 89% of those surveyed concur that governments and regulatory authorities are pushing hard for increased tax transparency, however less than half (43%) believe this global push will deliver better outcomes and improved clarity.

The Thomson Reuters 2013 Tax Survey, which gathered feedback from the tax directors of 125 leading companies in Australia and New Zealand, found the three key impacts of this drive to improve levels of transparency were; increased pressure on in-house tax teams to deliver compliant lodgements (60%), a need for additional resources for internal tax compliance (48%) and a requirement to invest in additional technology (47%).

Commenting on the study, Paul Brindle, managing director for the Tax & Accounting business of Thomson Reuters, said: “There is no doubt Australian and New Zealand companies are feeling the effects of increased pressure regarding data transparency. However, there appears to be a reluctance to respond appropriately at this point with many saying they do not plan to make any significant changes to their operations in the near future.”

More than half (54%) of respondents said ongoing uncertainty around new regulations and a lack of guidance around tax rulings was causing significant concern, particularly in relation to transfer pricing legislation. Despite 34% having plans to adopt technology solutions to manage transfer pricing demands, almost half (49%) have no plans to change in response to increasing regulation.

“Transfer pricing is at the frontline of the push for transparency,” said Brindle. “And with transparency now one of the key focus areas for tax authorities globally, Australian and New Zealand companies need to consider how this will affect them. They need to put plans in place to be able to handle the pressure on people and resources that will inevitably increase moving forward.”

Almost all (97%) of respondents said advanced technology is playing a critical role in helping them do their jobs. Additionally, 82% see cloud and hosted solutions as the top trend over the next three years. However, only 40% of those surveyed plan to move their tax software to cloud-based or hosted solutions, citing data security (50%) and availability/reliability (41%) as their greatest concerns.

A third of respondents also said cost was a key impediment to them adopting cloud-based or hosted solutions. “But this is a ‘false economy’,” said Brindle. “The benefits of moving to a cloud solution can be significant with major cost savings and improved efficiencies.” Furthermore, 55% of respondents said they would not consider using mobile applications to access their work on the move, further highlighting the slow adoption rate of technologies which are viewed as less secure than in-house software or hardware.

Other key findings from the survey included:

• There was a 2% rise (to 54%) in respondents indicating they hold regular meetings to keep their directors abreast of changes in tax regulation and legislation;
• Only 11% of respondents indicated their company had any plans for off-shoring, and of those, most indicated that off-shoring was most likely to occur in markets such as India or the Philippines;
• There was a 7% increase (to 93%) in electronic lodging to the ATO year on year, reflecting the phasing-in of Standard Business Reporting (SBR) for Australian companies. Despite this, close to half (42%) of respondents indicated they were unsure whether they supported SBR;
• A total of 37% of respondents indicated their business would increase investment in people, processes and technology in order to deal with GST risk over the coming years.

About Thomson Reuters
Thomson Reuters is the world's leading source of intelligent information for businesses and professionals. We combine industry expertise with innovative technology to deliver critical information to leading decision makers in the financial, legal, tax and accounting, healthcare and science and media markets, powered by the world's most trusted news organization. With headquarters in New York and major operations in London and Eagan, Minnesota, Thomson Reuters employs more than 55,000 people and operates in over 100 countries. Thomson Reuters’ shares are listed on the Toronto and New York Stock Exchanges (symbol: TRI). For more information, go to www.thomsonreuters.com.

About the Thomson Reuters Annual Tax and Accounting Survey
A total of 125 current ANZ Thomson Reuters Tax & Accounting customers participated in the survey from 12 September to 11 October, 2013; a 7% response rate.

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Sarah Corry
ICON International Communications
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