Six key business tax issues for 2015

Business leaders need to stay informed

This year, it will be critical for business executives here in Denver and Colorado to stay informed on a number of tax issues in the U.S. and abroad that could affect company operations and, potentially, corporate reputations in 2015.

To provide the best value for their companies, leaders will need to stay informed and carefully consider a range of tax scenarios when making near- and longer-term decisions.

Looking ahead, we see six action items for business leaders in 2015:

  1. Monitor Federal Business Tax Reform Developments – There’s broad-brush agreement in Congress on the basics for tax reform, especially on the need for a lower corporate tax rate and a reduction in the number of tax preferences, but the challenge of reconciling several fundamental issues could make for a difficult and uncertain road ahead.  Business leaders will need to monitor the issue closely and consider a range of possible scenarios.
  1. Keep an Eye on the Changing State Tax Landscape – The Republican victories in the mid-term elections mean that lowering or possibly eliminating the corporate income tax altogether could become reality in some states and that various business incentives are likely to continue or expand. But other state taxes and fees may rise to offset any reductions or incentives, so the bottom line for operational costs may not improve dramatically.

Colorado overall is in good shape, stable with a handle on spending and revenue estimates. Various constitution amendments, such as the Taxpayer's Bill of Rights (TABOR) and the Gallagher decision, are seen by some as restricting the government in deciding how to allocate resources. Governor Hickenlooper wants to start evaluating what limitations around allocating resources may exist in relation to these amendments. The Colorado business community will need to keep an eye on these events.

  1. Pay Close Attention to the OECD’s BEPS Initiative – Companies with global operations and supply chains need to start preparing for the inevitability of increased transparency on several fronts. For example, as refinements to the September 2014 Organisation for Economic Co-operation and Development (OECD) recommendations on key elements of its initiative on base erosion and profit shifting (BEPS) have been come clear, companies now need to evaluate whether they are able to produce documentation that will be required to comply with reporting obligations.
  1. Be Prepared to Comply with FATCA and OECD’s Common Reporting Standard – Many companies, especially those in financial services, have spent 2014 preparing for the implementation of the U.S. provisions commonly known as the Foreign Account Tax Compliance Act (FATCA); the focus in 2015 now shifts to ensuring that systems put in place to comply with the law are adequate to respond to the globalization of FATCA into the OECD’s Common Reporting Standard (CRS).  While the CRS is based on FATCA, expect some differences as many countries which have agreed to implement the reporting standard get set to bring it online.
  1. Involve Tax Early in Discussions of Divestitures to Gain Maximum Value – As companies continue to focus on core strategies to sustain future growth, many are turning to sometimes complex divestitures of noncore businesses to generate cash and streamline operations.  Determining the tax implications of these actions is critical, which means that Tax professionals need to be involved early on to increase the likelihood of a successful transaction. 
  1. Think Creatively About Tax’s Increasing Technology Needs – Expanded tax reporting requirements coming in 2015 at the federal, state, local and international levels make integrating technology into company tax operations a critical business need – especially because failure to comply could lead to costly penalties. To gain maximum business benefit from technology investments, evaluate what systems could bring value to tax department staffs and forge close alliances between information technology and tax departments.
Categories: Finance