www.internationaltaxreview.com/taxdisputes Tax Controversy SIXTH Leaders EDITION The comprehensive guide to the world’s leading tax controversy advisers Contents 2 Introduction and methodology 8 Bouverie Street, London EC4Y 8AX, UK 3 Global 174 Italy Tel: +44 20 7779 8308 overview 184 Japan Fax: +44 20 7779 8500 Troubled waters Managing editor Caroline Byrne – global 191 Luxembourg [email protected] transparency Editor Anjana Haines and controversy 193 Malaysia [email protected] in uncertain 198 Mexico Deputy editor Joe Stanley-Smith times [email protected] 211 Netherlands 8 Argentina Reporter Amelia Schwanke 219 New Zealand [email protected] 9 Australia Deputy editor, TP Week.com Joelle Jefferis 222 Norway [email protected] 27 Austria 225 Peru Production editor Nitesh Vaghadia 32 Belgium [email protected] 226 Philippines Publisher Oliver Watkins 43 Brazil [email protected] 229 Poland 54 Bulgaria Associate publisher Andrew Tappin 232 Portugal [email protected] 55 Canada Business manager Brittney Raphael 234 Puerto Rico [email protected] 82 Chile 235 Romania Senior marketing executive Sophie Vipond 84 China [email protected] 239 Russia Marketing executive Anna Sheehan 104 Colombia 251 Singapore [email protected] 106 Croatia Subscriptions manager Nick Burroughs 259 South Africa [email protected] 106 Cyprus CEO, Legal Media Group Matthias Paul 263 South Korea 107 Denmark SUBSCRIPTIONS AND CUSTOMER SERVICES 270 Spain Customer services: +44 20 7779 8610 107 Ecuador UK subscription hotline: +44 20 7779 8999 280 Sweden US subscription hotline: +1 800 437 9997 108 Finland 292 Switzerland © Euromoney Trading Limited, 2016. The copyright of all 112 France editorial matter appearing in this Review is reserved by the 301 Taiwan publisher. 126 Germany No matter contained herein may be reproduced, duplicated 306 Thailand or copied by any means without the prior consent of the 143 Greece holder of the copyright, requests for which should be 307 Turkey addressed to the publisher. Although Euromoney Trading 144 Gulf Limited has made every effort to ensure the accuracy of this Cooperation 313 Ukraine publication, neither it nor any contributor can accept any Council legal responsibility whatsoever for consequences that may 316 UK arise from errors or omissions, or any opinions or advice 145 Hong Kong given. This publication is not a substitute for professional 332 US advice on specific transactions. 151 Hungary The top US tax Directors John Botts (Chairman), Andrew Rashbass (CEO), controversies in Colin Jones, The Viscount Rothermere, Sir Patrick Sergeant, 155 India 2016 Paul Zwillenberg, David Pritchard, Andrew Ballingal, 166 Indonesia Tristan Hillgarth 391 Venezuela International Tax Review is published 10 times a year by 173 Ireland 395 Vietnam Euromoney Trading Limited. This publication is not included in the CLA license. Copying without permission of the publisher is prohibited ISSN 0958-7594 402 Index of firms 1TAX | www.internationaltaxreview.comCONTROVERSY LEADERS www.internationaltaxreview.com TAX CONTROVERSY LEADERS | 1 Introduction Tax litigation experts are increasingly in demand as tax authorities around the world expand their Methodology resources to audit the tax affairs of big firms and challenge any irregularities. Tax Controversy Leaders is a guide Global trends this year have centred on how to the leading tax dispute resolution governments worldwide are implementing the lawyers and advisers in the world. In OECD’s recommendations in the base erosion and addition to highlighting tax profes- profit shifting (BEPS) project, leading to a number sionals, the guide also includes liti- of disputes arising as taxpayers and authorities gators and barristers who may not adjust to new standards and mechanisms. practise tax on a day-to-day basis. In Europe, the European Commission’s state aid Inclusion in this guide is based investigations are unravelling agreements held bet - on a minimum number of nomina- ween multinationals and governments. The Euro - tions received. Besides the required pean Commission’s decision that requires Ireland to number of nominations, entrants obtain $14.5 billion in back taxes from Apple over must also possess evidence of out- “illegal” state aid is just one example of a ruling standing success in the past year and against a US multinational enterprise in recent years. consistently positive feedback from Apple and Ireland are appealing the Commission’s peers and clients. Firms and individ- ruling, as are Luxembourg and the Netherlands for uals cannot pay to be recommended the Commission’s state aid deci sions that went in the Tax Controversy Leaders against Fiat and Starbucks, res pect ively, in October guide. 2015. Moreover, the Danish gov ernment will inves- tigate hundreds of taxpayers with potential unde- clared offshore assets after announcing that it will purchase data leaked in the Panama Papers scandal. Reliable expert advice regarding such tax audits, investigations, disputes and litigation has never before been more valuable for businesses and governments alike. In the US, the Internal Revenue Service continues to pursue transfer pricing issues and is aggressively litigating transfer pricing cases. 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. The remit of tax controversy advisers now extends far beyond the courtroom with many taxpayers seeking advice on tax dispute prevention tech- niques. In addition, many tax controversy advisers provide services on tax audit management practices, global strategic planning of tax audits and disputes, tax risk management, analysis and disclosure, mutual agreement procedures, advance pricing agreements and alternative tax dispute resolution. We hope that this sixth edition of the Tax Controversy Leaders guide will provide you with the confidence to obtain reliable and trustworthy advice in each of the areas highlighted above, in each of the 53 jurisdictions covered. Anjana Haines, Editor, International Tax Review TAX2 | www.internationaltaxreview.comCONTROVERSY LEADERS www.internationaltaxreview.com TAX CONTROVERSY LEADERS | 2 Global Troubled waters – global transparency and controversy in uncertain times David Swenson, global leader of PwC’s tax controversy and dispute resolution network, looks at how the OECD’s BEPS project is changing the tax controversy and disputes landscape and the potential pitfalls that may emerge as certain jurisdictions do not commit to the multilateral initiatives. Enhanced tax transparency, tax efficiency, and improved tax dis- pute resolution mechanisms are driving themes in today’s global tax landscape, given the promulgation of new disclosure requirements and automatic exchange of information at the centre of agendas of both governmental and non-governmental organisations. The OECD’s country-by-country reporting (CbCR) template, recommended in Action 13 of its base ero- sion and profit shifting (BEPS) project, is significantly impact- ing how multinational enterprises (MNEs) look at the tax func- tion within their organisation, and is generating concerns over David Swenson PwC the public disclosure of reported data. There is also uncertainty over how the data will be interpreted by tax authorities from a risk assessment perspective, and the potential for an increase in audits and disputes worldwide. At the same time, the European Commission’s state aid investigations into certain rulings received primarily by US- based MNEs, and the Commission’s recent decision to require Apple to retroactively pay $14.5 billion in unpaid taxes, are also causing chaos in the global tax environment – creating even more uncertainty for MNEs that obtained tax rulings originally thought to be in compliance with international standards. Moreover, these state aid investigations have been questioned as undermining the OECD’s efforts to reduce tax avoidance through its BEPS initiatives, including CbCR, and thereby lead- ing to a new era of global tax transparency and increased con- troversy. Tax transparency – dawn of a new era Transparency is one of the fundamental pillars of the OECD’s 3TAX | www.internationaltaxreview.comCONTROVERSY LEADERS www.internationaltaxreview.com TAX CONTROVERSY LEADERS | 3 Global BEPS initiatives, partly accomplished through the OECD’s BEPS Action 13 on the Transfer Pricing Documentation and CbCR. Action 13 recommends a three-tiered approach that includes a master file, a local file, and a CbCR template for multinationals to report income, taxes paid, and economic activity on a country-by-country basis that will collectively move disclosure and transparency for tax administrations to new, unprecedented levels. Standing alone, the disclosure of the global allocation of income, taxes paid, and econom- ic activity via the CbCR initiative is intended to serve as a ‘risk assessment tool for tax author- ities’. Tax authorities will, however, view the master file and local file in parallel with the CbCR to rationalise the CbCR results as a beginning point in deciding whether to initiate a transfer pricing audit. The consequential effect is that the three filings will enable tax administrations to use the reported information to perform data analytics, identify transfer pricing risks, deploy resources to more effectively assess such risks, and commence audits with more information