Tuesday, October 23, 2018

Chief Strategic Officer: A New World

23 October 2018

Multinational organisations typically have the roles of chief operating officer, general counsel, chief information officer, human relations officer, chief tax officer, chief financial officer, and perhaps a chief compliance officer supporting the business strategy and the chief executive officer. However, in light of recent tax developments, there may now be the opportunity to sculpt a formal position of chief strategic officer.

Tax administrations are entering the new world of risk analysis via country-by-country (CbC) reports being exchanged, with the typical functions responsible for understanding new relationships and business dynamics to engage an efficient and productive audit addressing the top risks within their jurisdiction. Additional processes and expertise could be enhanced by employing someone whose full-time focus is on strategy and risk to achieve win-win opportunities with taxpayers. Complex OECD proposals are being drafted that will further complicate the objectives of tax administrations if significant functions are not created or changed to embrace the new initiatives. Dispute resolution processes are being legislated as a result of the BEPS initiatives.

For multinational organisations, several functions engage in this role, although there are significant functional overlaps that may be dependent on the individuals to ensure seamless engagement on a global scale. Customs audits are typically conducted separate from transfer pricing audits, often with no parity for the intertwined results. New, subjective anti-avoidance initiatives in Europe and across the world demand additional business documentation and strategic thought by the international business community.

Shifting tariffs/duties have sparked a critical focus on supply chain planning that has many implications for transfer pricing, tax reporting, duties/customs compliance and other related functions.

Can a tax department, or a combined multiple of functions, efficiently lead global strategic objectives? To date, it has worked well, although the new objectives of the OECD, tax administrations, and world leaders combined with enhanced business complexity will further strain the resources of most organisations without a thoughtful shift to a high profile function embracing strategy in its entirety.

A focused function, for both tax administrations and multinational organisations, will place more demands on operating systems to produce reliable information, while various strategic plans are being developed.

As the tax developments continue to challenge the concepts of old-world planning and thinking, it may be time to adapt to a new world via a chief strategy officer position that demands a high profile and executive presence for both tax administrations and multinational organisations.

Keith Brockman is the VP Global Tax at Manitowoc Foodservice. His previous role was international tax director at Mars. He is also a lecturer, frequent speaker and the author of the Strategizing Multinational Tax Risks blog. In his regular ITR column he provides a practical analysis of some of the more challenging recent developments for corporate taxpayers, looking at how in-house professionals can mitigate new risks and identify effective solutions in an evolving environment.

The above article was published on www.internationaltaxreview.com on October 15 2018 and has been republished with the approval of the Publisher.

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