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Latin American businesses lead demands for tax agreement

26th September 2014

MGI World Global business harbour a desire for tax agreement, but Latin American companies are leading the calls.

Businesses want a global agreement on taxation and harmonisation of rates, according to a new survey of firms across 34 jurisdictions. There is broad agreement on wanting more transparency on tax planning, revamped tax rules for a digital economy and the harmonisation of global corporation tax rates.

Latin American companies are by far the most enthusiastic about seeing these changes, which are being sought as part of the OECD/G20 BEPS deal.

The Grant Thornton survey showed 92 per cent of firms in Latin America want to see more transparency in what is acceptable tax planning. The same proportion want to see updated tax rules for a modern, digital economy, while 87 per cent of businesses in the region would like greater harmonisation of corporate taxation rates.

Businesses in other parts of the world were not quite as positive, but nonetheless support the changes. Three-quarters (76 per cent) of businesses in Europe want transparency on tax planning, while 60 per cent of companies in North America want the same. Under half (44 per cent) of business leaders polled in Asia-Pacific desire this.

Francesca Lagerberg, GT’s global leader for tax services, says: "Tax planning emerges as a major issue for business leaders around the world and the call is for global action to update transfer pricing guidance to boost growth prospects. You just have to look at recent climate change negotiations to see how hard it is to build multilateral agreements on complex issues where different territories are fighting to protect sovereignty.”

Regional differences were noted in other areas. Companies in Asia-Pacific were also less likely to support updated tax rules for a digital economy, with just 39 per cent in favour, versus 68 per cent in Europe and 65 per cent in North America.

Ms Lagerberg added: “Existing legislation is no longer fit for purpose in an increasingly interconnected, digital world in which the definition of a 'border' is archaic and next to meaningless."

European and North American companies were more lukewarm about the prospect of harmonising corporate taxes than their Latin American neighbours, with roughly two-thirds supportive.

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