“Digitalization and business transformation continue to be major drivers of tax disputes around the world. There is no consensus on how to define value and value creation, because each jurisdiction determines liability differently and when there is a large change in the nominal tax rate, the imbalance is even more pronounced,” explained Scott Frewing, a partner in the Palo Alto office of Baker McKenzie.
more conflicts
In addition to this topic, companies are experiencing times of change in the international tax landscape, specifically those promoted by the Organization for Economic Cooperation and Development (OECD) regarding the global minimum tax and the tax on digital service companies.
“The lack of clarity and the free interpretation of the rules and notions of the global and local tax authorities will undoubtedly lead to an increase in problems”, refers to the result of the Baker McKenzie survey.
Caroline Silberztein, director of the firm’s Transfer Pricing group, explained that in the first years after the entry into force of these regulations, double taxation will be a key challenge for taxpayers, as the tax authorities of each country will seek to ensure the revenue for your own jurisdiction.
Litigation
The firm detailed that the survey showed that nearly 269,000 million dollars of capital is subject to tax disputes in 2021, which represents an increase of 300% since the last report in 2018, “The Shape of Water: Tax Disputes in the age or intangible value”.
In the case of Mexico, 29% of those surveyed considered that the value of their litigation exceeds 100 million dollars, however, the majority present disputes for smaller amounts, mainly in the markets of Europe, the United States and the Mexican territory itself. .
The volume and value of tax litigation will also continue to rise in Mexico.
58% of those surveyed agreed that the volume of litigation increased last year, in addition to the fact that the values of these also rose. In less encouraging news, 68% of respondents predicted the volume will increase further in the next 12 months, with 75% expecting the same for the sum total of litigation value.
