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ON-SCREEEN TEXT: KPMG cutting through complexity. KPMG Dispute Resolution and Controversy Services Network.
SHARON KATZ-PEARLMAN: The reason that KPMG International has now decided to form the Tax Dispute –
ON-SCREEEN TEXT: Sharon Katz-Pearlman, Head of Tax Dispute Resolution & Controversy Network.
SHARON KATZ-PEARLMAN: - Resolution and Controversy Services Network is because of the changing landscape around dispute resolution. There are a lot of events happening around the world economically, and also as a result with the revenue authorities in each of the countries. We’re seeing revenue authorities coming together--a lot of similar initiatives. We’re seeing clients all over the world dealing with similar issues and similar approaches.
JULIE HUGHFF: Tax authorities are under more pressure –
Julie Hughff, Partner, KPMG in the UK.
JULIE HUGHFF: - to collect tax revenue. I think, you know, the result of that, is that they’re all after their bit of the pie. I think because businesses operate more internationally, in a way there are more areas to dispute.
SHARON KATZ-PEARLMAN: We are seeing more aggressive adjustments. We are seeing more penalties, and penalties being asserted in circumstances where we would never have seen a penalty asserted even three years ago.
PAUL LYNCH: There is a move for –
Paul Lynch, Partner, KPMG in Canada.
PAUL LYNCH: - the tax authorities to get more coordinated and to exchange more information. So I think there will be more information coming into the tax authorities, and then more issues generated from that information.
DICK BARMENTLO: When you talk about increasing –
Dick Barmentlo, Director, KPMG in the Netherlands.
DICK BARMENTLO: - disputes, we see the transfer pricing will become, is becoming and will become more relevant because adjustments on a transfer pricing basis always takes effect in other countries, undoubtedly combined with the possibilities for tax authorities to act in in joint audits.
The Benefits of the Network.
SHARON KATZ-PEARLMAN: Many of our clients are extremely capable of dealing with these issues by themselves, but when they’re dealing with issues in six jurisdictions or in eight jurisdictions or it’s an across border issue, I think what they are finding is that they do need extra help in those circumstances. That’s the benefit that we think that the dispute resolution network provides, that we can provide assistance wherever they’re doing business, and that assistance is coming from experts who do this day in and day out, and see what the trends are that are developing in that country and see how they are playing out.
JULIE HUGHFF: The benefit that comes from that is that you, as a tax director, are not investing the time over and over again every time you have an dispute in a country--identifying who would be the right person in that firm of advisors to help you, who’s the best person in that country, explaining to them what your approach is, how you like to deal with resolving tax disputes. You will have a team that you can go to and you know you’re always getting the expert in that country, someone that we, as a network, believe in and has got a track record of resolving disputes; and they will understand you and your approach, because we’ll have shared that with them.
Protect, Manage and Resolve.
SHARON KATZ-PEARLMAN: The Tax Dispute Resolution Network views dispute resolution assistance as really a kind of a combination of three elements—protect, manage and resolve. Protect, to us, means assisting the client and really protecting the client in advance. So let’s make sure that documentation is in place; let’s make sure that you have everything you need to proactively address issues that may come up; know where your risk areas are. Risk now is a huge issue for every company—risk management—but it’s very important that the company understands where they might have risk exposure in tax. The manage part of our thought process, we’re thinking in terms of how best to get from point A, which is when they come in, to point B, which is when they are packing up and leaving; and how can we expedite that process for you.
JULIE HUGHFF: So when you come to resolve, there are a number of ways you can look at this. It may well be that there are occasions where actually having debated all of the issues, having understood the arguments of the tax authority, the tax payer actually decides that on balance, the tax authorities have got the stronger case. And indeed, there might be cases where they would settle the dispute by agreeing with the tax authority. There are other cases where actually that isn’t what happens, because you still feel that you have got a strong technical case, you understand the other parties view but actually what you work to is reaching a resolution, a settlement that’s going to work for both parties.
The Range of Disputes.
JULIE HUGHFF: Our teams can advise on whatever the issue happens to be, and whatever local taxes they have there. Really, I think that is increasingly important, because often there are a mix of taxes that our clients are looking at and where they’re facing challenges.
The Quality of the Network.
PAUL LYNCH: The quality of the people in the KPMG network is very high, and what is also interesting is most of them are ex-government officials, so they’ve worked with the tax authority either in the administrative side or on the legal side in court. So they know the systems, they know the processes, and they know the people. They’re all partners in KPMG, and so they really add a high level of quality as well as good relationships locally and globally.
The Human Side of Disputes.
JULIE HUGHFF: Emotions often run very high in disputes, and again, the characteristics that we’re looking for in people in our network is that they are able to handle those emotions, they are able to guide people through the process, whatever that process happens to be. It might be actually working in a collaborative way using alternative dispute resolution or mediation to get to a settlement. It might be litigation, but emotions will always run high, and you have to sort of coach and support people through the process.
DICK BARMENTLO: I don’t think it’s advisable for tax directors to fight all disputes. You can settle disputes in various ways, and compromise is, from time to time, a very good solution for it.
JULIE HUGHFF: One of the other things we bring is a challenge to the tax directors because often disputes, by their very nature, have been going on for a number of years. So both parties involved in the dispute can become very engrained in their positions. Actually what we can do is come in and take a really critical and challenging look at the position, and really get people to step back and think about their positions, and actually is it time to think about a new direction. I think again, clients really appreciate that challenge, and that actually helps to sometimes unlock things and start to take things a step forward where perhaps they’ve become entrenched for a number of years.
The Client Experience.
SHARON KATZ-PEARLMAN: I think that the client experience dealing with the Tax Dispute Resolution Network hopefully will be one that leaves them feeling that they got outstanding assistance in a number of ways, from a technical perspective as well as from a strategic perspective, because those two go hand-in-hand. We would hope that they felt that the process worked efficiently, and that we had brought added value by being able to navigate through the different options of resolution and helped them pick the best option that’s going to close down their issue and close down their investigation as quickly as we possibly can.
JULIE HUGHFF: By working with the team of people who understand your business, understand your culture and understand your approach to managing your tax affairs and resolving disputes, you’re able to get a more consistent approach around the world.
KPMG cutting through complexity. ©2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG international have any such authority to obligate or bind any member firm. All rights reserved.
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A video conversation that explains what the KPMG Tax Dispute Resolution and Controversy Services network is all about and what services it offers companies globally.
KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.