Huge Stakes In International Tax Disputes

Tax disputes are becoming a major challenge for global companies. According to a Baker McKenzie research paper, the amount under dispute, 75.3 billion, is enough to wipe out more than half of profit growth for the Fortune 500. Transfer pricing and asset valuation are the two main drivers. The study suggests preparing to deal with tax officials who have an increasing demand for facts and documentary evidence. When such demands are made, be clear on both the authority’s and the taxpayers rights. For cross-border matters involving transfer pricing, when agreeing to a settlement in one jurisdiction consideration should be given to how it might impact the ability to reach settlements in other jurisdictions. Tactics for negotiated settlement and litigation diverge and it is hard to do both at once. Make sure to assess the impact of decisions made in respect to each on the other, and know your appetite for litigation.