Across the globe, tax authorities are closing in on those suspected of breaking internal tax and finance regulations, writes 6CATSPRO, our international compliance consulting arm.

While most global organisations will have greater resources to challenge sentences and sanctions than the average contractor, they are not spared from being under the spotlight when it comes to regulatory compliance.

Many countries are now looking to claw back revenue lost during the pandemic and are honing in on businesses and individuals suspected of breaking the law. And, since the introduction of the Criminal Finances Act in 2017, directors of agencies placing contractors who act illegally are now themselves at risk of punishment from authorities around the world.

Here we highlight some of the latest cases and outline what agencies must keep in mind to remain compliant.

India

The Lahore High Court has confirmed that tax evaders will now face criminalisation and confiscation of proceeds of their crimes. The ruling highlights the increased focus on tax fraud in India. The country currently loses around $10.3bn every year in suspected evasion to multinational corporations alone, and the predicted losses driven by the so-called ‘grey economy’ are expected to be more than double that figure. If you’re placing contractors in India, and particularly in Lahore, it’s worth ensuring that you and the specialists you work with are familiar with the latest changes in the Indian compliance and regulatory world.

UAE and Tanzania 

The governments of the United Arab Emirates and Tanzania recently signed an agreement for the avoidance of double taxation and prevention of tax evasion in the UAE financial ministry headquarters in Dubai. The move follows both countries’ efforts to boost cooperation in tax fields, increase investment opportunities, encourage trade exchange and promote development goals through the diversification of sources of national income. While Tanzania isn’t yet known as a leading destination for contractors, the UAE is one of the fastest-growing locations, meaning that agencies operating here should be aware of the compliance risk.

Canadian Revenue Agency identifies more than $76m owed by Canadian citizens in Panama Papers fallout

The Canadian Revenue Agency hasn’t yet revealed whether it has collected any of this revenue to date, however a year on from the leak, the CRA has said its ‘compliance action’ is still in progress. The issue highlights that agencies placing talent in Canada need to be on top of their compliance, as it’s clear that pressure is increasing.

World’s largest meat company accused of trying to avoid paying tax in the UK

Two major meat processing firms, ABP and PPC, have been accused of avoiding paying tax on more than £160m in revenue.

Both companies exploited complex loopholes, but to date, no evidence has been found that either organisation participated in illegal activity. Both operate within the UK but leverage their presence in the Netherlands and Luxembourg to pay less tax. Each company also appears to have engaged in complicated intra-company money lending, via overseas subsidiaries of themselves, to claim reduced tax liability in the UK.

While the firms have not broken any financial laws so far, the investigation continues, with authorities on high alert to investigate any potential breaches. The case emphasises the extent to which companies will go in order to avoid paying taxes.

EU lawmakers pushing for crypto taxation to fight evasion

Members of the European Parliament have advocated for ‘effective taxation’ of crypto assets and, more broadly, ‘better use of blockchain.’ The resolution states that cryptocurrency holdings must be taxed fairly, transparently and effectively while also advising EU authorities to explore establishing simpler tax regimes for infrequent or minor merchants and transactions. While the growth of crypto has been rapid it has in recent years been met with increasing regulation and taxation requirements.

Managing your risks

Wherever you’re placing contractors, one thing is clear; tax functions and global compliance and reporting authorities are honing in on tax evaders and the organisations that facilitate them. Operating in multiple jurisdictions can be highly complex and the risks aren’t worth taking. If you’re at all uncertain about your organisation’s compliance status, or that of the contractors you work with, then get in contact with 6CATSPRO for international tax and compliance services you can trust.

Contact 6CATSPRO or for more updates on international tax and compliance, take a look at the 6CATSPRO blog.