www.internationaltaxreview.com/taxdisputes Tax Controversy FIFTH Leaders EDITION The comprehensive guide to the world’s leading tax controversy advisers Contents 2 Introduction 160 Italy and 8 Bouverie Street, London EC4Y 8AX, UK 169 Japan Tel: +44 20 7779 8308 methodology Fax: +44 20 7779 8500 174 Luxembourg Managing editor Ralph Cunningham 3 Global [email protected] Global chaos: 175 Malaysia Editor Matthew Gilleard Tax dispute [email protected] resolution under 178 Mexico Reporter Joe Stanley-Smith mounting 187 Netherlands [email protected] pressure Managing editor, TPWeek.com Sophie Ashley 195 New Zealand [email protected] 10 Argentina Reporter, TPWeek.com Joelle Jefferis 198 Norway [email protected] 12 Australia Production editor João Fernandes 202 Peru [email protected] 27 Austria Publisher Oliver Watkins 202 Philippines [email protected] 32 Belgium Associate publisher Andrew Tappin 43 Brazil 203 Poland [email protected] 205 Portugal Online associate publisher Megan Poundall 57 Canada [email protected] Canada 208 Romania Marketing manager Kendred Dove Revenue Agency [email protected] 210 Russia Marketing executive Sophie Vipond expands anti- [email protected] abuse arsenal 218 Singapore Subscriptions manager Nick Burroughs 75 Chile [email protected] 225 South Africa Account manager James Baker 79 China [email protected] 227 South Korea Divisional director Greg Kilminster 97 Colombia 232 Spain SUBSCRIPTIONS AND CUSTOMER SERVICES 100 Croatia Customer services: +44 20 7779 8610 242 Sweden UK subscription hotline: +44 20 7779 8999 100 Denmark US subscription hotline: +1 800 437 9997 254 Switzerland © Euromoney Trading Limited, 2015. 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Chairman Richard Ensor 128 Hong Kong US authorities evolve approach Directors Sir Patrick Sergeant, The Viscount Rothermere, Christopher Fordham (managing director), Neil Osborn, Dan 132 Hungary to litigation Cohen, John Botts, Colin Jones, Diane Alfano, Jane 344 Venezuela Wilkinson, Martin Morgan, David Pritchard, Bashar AL- 134 India Rehany, Andrew Ballingal, Tristan Hillgarth How to resolve 345 Vietnam International Tax Review is published 10 times a year by disputes in India Euromoney Trading Limited. This publication is not included in the CLA license. 151 Indonesia Copying without permission of the publisher is prohibited ISSN 0958-7594 158 Ireland 349 Index of firms 1TAX | www.internationaltaxreview.comCONTROVERSY LEADERS www.internationaltaxreview.comTAX CONTROVERSY LEADERS | 1 Introduction Tax litigation experts are increasingly in demand as authorities around the world get more and more Methodology aggressive in their use of anti-avoidance measures at national level. Tax Controversy Leaders is a guide Global trends, of course, centre on develop- to the leading tax dispute resolution ments coming out of the Paris-based OECD as its lawyers and advisers in the world. In project on base erosion and profit shifting (BEPS) addition to highlighting tax profes- approaches its resolution. A great deal of uncertain- sionals, the guide also includes liti- ty still hangs over the project, but stakeholders gators and barristers who may not agree on one thing: whatever form the final recom- practise tax on a day-to-day basis. mendations take, the most immediate tangible Inclusion in this guide is based impact will be a surge in the number of disputes on a minimum number of nomina- that arise as taxpayers and authorities adjust to new tions received. Besides the required standards and mechanisms. number of nominations, entrants In Europe, state aid investigations show that must also possess evidence of out- even structures that were agreed upon with nation- standing success in the past year and al authorities are coming under retrospective scruti- consistently positive feedback from ny from higher powers, again raising the impor- peers and clients. Firms and individ- tance of quality advice that will stand up to investi- uals cannot pay to be recommended gation for years to come. in Tax Controversy Leaders. In the US, in the face of declining resources, the IRS is attempting to re-engineer the way it chooses taxpayers for examination, as well as the way in which it conducts audits, with taxpayers and advisers reporting new challenges which disrupt certainty. With all of this in mind, it is clear that taxpayers need access to lawyers and advisers with experience in all stages of tax controversy. Far from being confined to the courtroom walls, the remit of tax controversy advisers now extends further than it has ever done. Taxpayers are seeking advisers with expertise that encompasses tax dispute prevention techniques; tax audit management practices; global strategic planning of tax audits and disputes; tax risk manage- ment, analysis and disclosure; and alternative tax dispute resolution. We hope that this fifth edition of the Tax Controversy Leaders guide will provide you with the confidence to obtain sound advice in each of the areas highlighted above, in each of the 50 jurisdictions covered. Matthew Gilleard, Editor, International Tax Review TAX2 | www.internationaltaxreview.comCONTROVERSY LEADERS www.internationaltaxreview.comTAX CONTROVERSY LEADERS | 2 Global Global chaos: Tax dispute resolution under mounting pressure David Swenson, global leader of PwC’s tax controversy and dispute resolution network, looks back at how megatrends in global tax controversy have developed over the past year, and ahead to the trends set to emerge in a post-BEPS environment. “The nature of today’s global tax environment is creat- ing…numerous emerging megatrends in tax controversy…. Now, more than ever, it is necessary to keep an eye on these megatrends, paying particular attention to how the impending BEPS guidance will affect those trends – or even create new megatrends confronting the international business community…. In this unstable environment, the development and use of alternative dispute resolution options is critical and is gaining increasing popularity.” David Swenson David Swenson, ‘Emerging megatrends in global tax PwC controversy,’ International Tax Review, September 3 2014 Converging megatrends are creating a turbulent environment Emerging megatrends have slowly developed over the past decade in the tax controversy area and have now converged to shape today’s chaotic and turbulent global tax environment. The number and the size of audits, exams and inquiries has dra- matically increased worldwide, reaching record levels. Influenced by the ongoing Organisation for Economic Cooperation and Development (OECD) base erosion and prof- it shifting (BEPS) project and the related tax planning debate, it has become the norm for countries to engage in aggressive enforcement actions and to adopt unilateral measures. In this environment, fewer disputes are being successfully resolved in a timely and efficient manner. In turn, dispute resolution options are under mounting pressure and the threat of double taxation is becoming even more pervasive. Indeed, empirical evidence confirms that the number of con- tentious and protracted tax disputes is increasing dramatically, as is the risk of double taxation. Recent mutual agreement proce- 3TAX | www.internationaltaxreview.comCONTROVERSY LEADERS www.internationaltaxreview.comTAX CONTROVERSY LEADERS | 3 Global dure (MAP) statistics released by the OECD show the highest pending inventory of MAP cases in history – and a 94% increase since 2006. These statistics are dramatic evidence of the surge in tax audits and cross-border disputes among OECD member countries over the last eight years. This troubling trend is compounded by the concern that some areas of the OECD BEPS Action Plan will recommend the introduction of new controversial rules (some based on subjective criteria), which may significantly alter the international tax system and could lead to an even greater increase in audits and disputes, placing further pressure on domestic and international dispute resolution alternatives. This environment places a premium on tax audit and dispute prevention techniques because multinational companies (MNCs) are under constant competitive pressure from many directions, including the pressure to structure practical, effective, and efficient worldwide busi- ness operations. MNCs need to develop coordinated approaches to audits and disputes around the globe, adopt preventative measures, such as obtaining advance pricing agreements (APAs) and other appropriate pre-filing rulings, and leverage historic and new alternative dispute res- olution techniques to achieve optimal results. The development and use of alternative dispute resolution options is gaining popularity in resolving