IFRS To Impact Global Corporate Tax Planning

by Glen Shapiro, LawAndTax-News.com, New York

23 September 2008

A new report issued on Monday by tax and business advisory firm Deloitte, looks at how a conversion to International Financial Reporting Standards (IFRS) could have significant ramifications for companies’ global tax planning for product and financial supply chains.

"Companies will need to pay close attention to the impact of a conversion to IFRS on their global tax structure, particularly in regard to tax issues associated with inter-company transfers, financing, shared service centers, supply chain planning, and entity rationalization,” commented Nathan Andrews, partner and leader of the Tax Accounting Services practice of Deloitte Tax LLP.

The Deloitte report, 'Five Ways a Conversion to International Financial Reporting Standards Could Impact a Global Tax Structure,' addresses five key areas where a conversion to IFRS could result in unanticipated tax consequences without proper planning.

According to the Deloitte, companies will likely need to adjust their global tax planning to reflect a tax and financial reporting environment that is migrating to IFRS at different paces in different countries. Such an update is of particular importance in global finance and product supply chain operations.

"Given the complexities multinational companies will face in converting to IFRS, many may now consider eliminating unneeded entities before undertaking a full conversion,” said Dan Lange, global managing partner of International Income Taxes for Deloitte Tax.

“Now is the time for companies to take a hard look at the number of legal entities and rationalize them. Not only does it make sense to evaluate global tax planning when a major business change such as IFRS conversion occurs, this could go a long way toward reducing the time and cost of such a conversion.”

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