75% of directors worldwide shaken by heightened risk in tax legislation

And oh, companies now fear entering emerging markets due to higher risk of tax controversy.

According to a release, the world’s biggest companies are also concerned about rapidly changing tax laws around the world. Seventy-five percent of tax directors in companies with more than $5 billion reported heightened risk or uncertainty around tax legislation. The figure rises to 78% for companies based in Brazil, Russia, India and China. Additionally, companies cited emerging markets as the source of their greatest risk related to legislative change.

Seventy-three percent of companies in the survey said entering or operating in these and other emerging markets significantly increases their risk of tax controversy. And 92% of China-based and 62% of Brazil-based companies say they’ve been audited more frequently and aggressively in the last three
years.

Mark Weinberger, Global Vice Chairman – Tax at Ernst & Young said the survey also reports some encouraging trends: for example, taxpayers and the tax administrators are working harder to prevent unnecessary conflict by building stronger relationships and creating processes to provide for dispute resolution on an expedited basis. The survey reports more interest by companies and administrators to develop these enhanced relationships, which follow good-faith guiding principles and behaviors on the part of the taxpayer and the tax administrator in a quest to achieve fairness and efficiencies for both parties.