Tax Perception is Reality

Blog Post

Tax Perception is Reality

In this month’s iTreasurer, we continue a discussion of taxes, this time focusing on strategy and the need to keep in mind the global attitudes on taxes when writing that strategy. Also in this issue: Corporate cash piles continue to grow, bots for treasury and a little blockchain, too.
 
Global attitudes on how corporations pay their taxes have been developing an edge over the past several years. Take the OECD’s BEPS, or Base Erosion and Profit Shifting initiative: The name itself implies tax dollars absconding to some low-tax haven, thereby eating away at the tax revenue. The UK has initiated a new requirement that British companies of a certain size must publish their tax strategy online.
 
And the UN, as part of its environmental program, has included a list of guidelines companies should take into consideration when creating the plan. The basic premise is: be nice, pay your taxes. “I think if they are not aware of this trend yet, they’re going to be aware of it very soon,” Barbara de Marigny, a partner at the law firm Orrick, says in “Striking a Balance with the Tax Plan” on page 1.
 
In our “Anticipated Exposures” section on pages 4-5, we discuss how institutional prime funds are still finding a place in the hearts and portfolios of MNCs; using performance scorecards to measure treasurers; and how onshoring—i.e., companies moving operations back to the US—is growing.
 
On page 6 is a discussion of how corporate cash continues to expand. But there’s another related growth that’s somewhat worrying to raters: “adjusted leverage for both investment-grade and speculative-grade issuers is near decade highs and, conversely, the cash-to-debt ratio is near decade lows.”
 
This month’s peer group summary is from NeuGroup’s Global Cash and Banking Group meeting. For members of this group, tech is top of mind. A high percentage of members currently are “implementing specific solutions to improve new or existing processes, with ERP upgrades, SWIFT implementations, TMS rollouts, and blockchain among the top projects.”
 
On page 11, we look at how robots could begin taking over the back office. That’s because the back-office workload is fairly repetitive, routine and perhaps above all, dreary and uninteresting. And while artificial intelligence for now may be “pie in the sky” when it comes to corporate use, robotics or more specifically, robotic process automation, “is more readily available, effective, and affordable than people realize. And equally important, it is relatively simple to deploy.”
 
On pages 12-13, we discuss the results of cross-peer group analysis on taxes and tax prep. The upshot, writes contributor Julie Zawacki-Lucci, is that “planning and modeling for the prospect of tax reform and its impact on capital structure, capital and cash forecasting are consuming large chunks of time for many NeuGroup peer group members lately.” But treasurers and corporations want to be prepared; thus they are developing scenarios and proposing actions for various outcomes.
 
Blockchain for treasury is the focus of the story on pages 14-15. There’s been a lot of talk about the transformative power of blockchain or distributed ledger for companies. “But so far,” writes contributor John Hintze, “few practical applications for corporate treasury have emerged. But that’s now changed.”
 
For over 20 years, iTreasurer has delivered intelligence for treasurers. Based on exclusive access to senior treasury executives who are members of The NeuGroup Network of treasury peer groups, iTreasurer takes their real-world experience to produce articles, case studies and reports that are specifically meaningful to treasury best practice. www.iTreasurer.com.
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