High-level challenges
Tax executives should be aware of regulatory and economic shifts in international tax, intersections with other tax areas, and how these can affect tax strategy.
For example, the Treasury Department and the IRS published Notice 2023-80 providing interim guidance and signaling regulations to address how foreign tax credit and dual consolidated losses rules would interact with Pillar Two global minimum tax model rules already in effect.
Knowing how Pillar Two operates with three top-up tax rules—an income inclusion rule, an undertaxed profits rule, and a qualified domestic minimum top-up tax—and how it affects credits that can be claimed is an important feature of tax planning for many multinational corporations.
Beyond tuning into new developments, tax executives can respond to global pressures by staying operationally agile and keeping their team ready for potential issues as early as possible.
Being prepared should include hiring and onboarding skilled and specialized tax staff, as well as targeted, timely training programs for your current team. It also involves identifying and following trusted sources of information to get a better sense of challenges ahead and how these could affect tax strategy.
Regulatory shifts
Seeking greater clarity on the corporate alternative minimum tax? Wondering about your approach to transfer pricing? Feeling uncertain about your unclaimed property reporting?
If you answered “yes” to any of those questions, you’re not alone. Much of the industry is trying to make sense of an increasingly complex tax environment and adjust to rising regulatory scrutiny at all levels—state and local, federal, and international.
There are a few ways tax executives can give their organizations a more comprehensive understanding of tax jurisdictions to strengthen compliance. First, they should provide timely communication about how a more stringent regulatory environment will affect other parts of the business in terms of documentation and other requirements.
They also should offer suggestions about how revisions in internal policies and procedures can support efforts to comply with the changes—and what the consequences could be if certain conditions aren’t met.
Most importantly, they should become more familiar with the specifics of key regulatory changes and incorporate them into tax planning. This might be easier said than done. A team needs to be given free time to dive into the details or work with knowledgeable advisers to help parse the new rules.
Preparing in this way will better prepare you and your team to navigate increased scrutiny and audits.
