Senior tax and finance leaders in ASEAN are gearing up for a period of intense scrutiny on tax issues following a pause in enforcement during the Covid-19 pandemic.
According to EY’s 2023 Tax Risk and Controversy Survey, 50% of surveyed senior tax leaders operating in ASEAN expect to experience more tax audits and disputes in the next two years.
‘Companies should ensure that incentives will not create future controversies’
As authorities step up enforcement, tax functions need to consider investing in global coordination of their approaches to reduce exposure to risks and penalties. In total, 91% of ASEAN respondents (compared with 84% globally) believed that either implementing or improving an existing global governance framework approach to tax risk and controversy management would add value to their business in the next two years.
Risk concerns
Crossborder tax is the biggest driver of tax disputes, with over half (58%) of tax leaders in ASEAN expecting authorities to focus more on international tax and transfer pricing in the next two years.
The implementation of the 15% global minimum tax rate, developed by the OECD and the G20-led BEPS 2.0 project, is also a concern, particularly given how little is known about how dispute prevention and resolution programmes will operate.
Tax governance
With 82% of businesses surveyed in ASEAN saying they lack complete visibility of their companies’ tax disputes globally, there is an urgent need to implement or improve a global governance framework approach to risk, with many organisations looking to centralise the management of disputes.
Increased resources
Leaders are creating new roles and functions within their organisations to deal with myriad tax risks and add value to their business. Taking a proactive approach to evaluating risk is considered a vital step in reducing the likelihood of disputes arising.
Angela Tan, EY’s ASEAN tax policy and controversy leader notes that an enhanced approach to tax controversy should not be delayed in the wake of global tax reform.
‘Economies in ASEAN have largely leveraged tax incentives extensively as a way to attract and retain inbound investment. As we move towards a global minimum tax, companies operating in this region should be thoughtful, ensuring that any incentives currently utilised will not create future controversies as countries adopt this major new reform.’
More information
More than 2,000 tax and finance executives in nearly 50 countries were polled for EY’s 2023 Tax Risk and Controversy Survey
