At a recent gathering of corporate tax professionals, many confessed to uneasiness about the damage to the reputations of their companies from media reports about their tax strategies.
Ernst & Young hosted its 10th Annual Domestic Tax Conference in New York in late April and polled the tax pros in attendance about reputation risk and tax policies.
Only 37 percent of the survey respondents said they are not concerned about reputation risk, while 29 percent said they are providing a more detailed explanation of their company’s tax policy and principles in public financial statements to offer clarity to investors and to inform all audiences openly.
Communicating about sometimes controversial tax strategies to corporate board members and regulators has also become more important to tax pros. To manage controversy effectively, 36 percent of the poll respondents said they have improved communication between the tax function and the board.
In addition, 32 percent indicated they have developed more cooperative working relationships with revenue authorities. This year, 60 percent of the tax professionals polled said they communicate effectively with their CFOs and that tax risk is a part of executive decision-making.
Many companies have come under fire in recent years amid revelations about the low tax rates that many multinational corporations pay in the U.S. and Europe. The wave of corporate inversions also provoked a backlash in Congress and efforts by the Obama administration to deny tax benefits to U.S. companies that move their tax domiciles to offshore tax havens.
Eighty-eight percent of the survey respondents work at billion-dollar companies, and 69 percent said they have been in their tax department for 10 or more years.
Twenty-eight percent of the experienced group selected changing U.S. tax policy as the most important issue facing all tax professionals, followed by data accuracy and availability, at 25 percent.