Passage of the bills would be an indication that governments around the world are increasingly focused on international tax issues, the Denver Business Journal quotes John Barber, an International Tax Partner with Grant Thornton LLP, as saying. Facing this growing trend, executive search firm, A.E. Feldman, says international tax jobs are already heating up. Anticipating a surge in demand for their services, accounting firms are actively seeking talent to ramp up their international tax practices.

Lawmakers Target Overseas Tax Abuses

The Foreign Account Tax Compliance Act would require overseas financial institutions, foreign trusts, and foreign corporations to provide information about their U.S. account-holders, grantors, and owners.

Provisions of the legislation are summarized by KPMG as follows:

• Require 30% withholding on payments to foreign financial institutions and other entities unless they acknowledge the accounts’ existence to the IRS and disclose relevant information including account ownership, balances and amounts moving in and out of the accounts

• Require individuals and entities to report offshore accounts with values of $50,000 or more on their tax returns and extend to six years the statute of limitations on assessment, when offshore accounts are unreported or misreported

• Require advisors who help set up offshore accounts to disclose their activities or pay a penalty, and require electronic filing of information reports about withholding on transfers to foreign accounts

• Tighten rules and penalties with regard to foreign trusts, including rules to determine whether distributions from foreign trusts are going to U.S. beneficiaries and reporting requirements on U.S. transfers to foreign trusts

• Provides that U.S. dividend payments received by foreign persons are treated as dividends even when structured as another type of distribution in an effort to avoid U.S. taxes

The nonpartisan Joint Committee on Taxation estimates the Foreign Account Tax Compliance Act would prevent U.S. individuals from evading $8.5 billion in U.S. tax over the next ten years, according to the House Ways & Means Committee.

“This bill offers foreign banks a simple choice – if you wish to access our capital markets, you have to report on U.S. account holders,” said Rangel, in a statement posted on the committee’s homepage. “I am confident that most banks will do the right thing and help to make bank secrecy practices a thing of the past.”

President Obama recently voiced his support for the proposed legislation. “Shortly after taking office, I laid out a set of proposals to crack down on illegal overseas tax evasion. The legislation introduced today would fulfill that promise, putting a stop to billions of dollars worth of abuses,” Obama said in a statement.

Following its introduction, Treasury Secretary Tim Geithner also released a statement commending the aim of the bill. “The legislation introduced today by Chairman Rangel and Chairman Baucus follows through on the Administration’s commitment to combating offshore tax evasion and ensuring a level playing field… This legislation will reduce the amount of taxes lost through the illegal use of hidden accounts and is the next step in making sure that everyone pays their fair share,” he said.

Demand Surges for International Tax Expertise

The increased government scrutiny of international tax issues is expected to trigger a surge in demand for international tax expertise. As the government hones in on tax loopholes and offshore tax havens, accountings firms must staff up with in-house expertise or strategic partnerships with international expertise, according to the Denver Business Journal.

“Most of the legislation or proposed legislation, like these two bills, are chalk full of international stuff, which means firms that provide international service will continue to hire new resources into their international tax practice in order to keep up with the changing rules and how they apply to their clients,” the report quotes Barber as saying.

“If that legislation does happen to pass, we’re going to need to hire additional resources, just like every other firm that has an international tax practice just because it’s going to be the biggest international tax bill we’ve had in a very, very, very long time,” Barber added.

Looking Ahead…

The legislation could pass this year, according to Select Revenue Measures Subcommittee Chairman Richard E. Neal (D-MA). In a statement at a hearing on foreign bank account reporting, Neal concluded, “This legislation casts a wide net in search of undisclosed accounts and hidden income. It is carefully balanced, and as we will hear from one foreign bank today, it is actually supported by one who will bear the brunt of this new disclosure… The American boxer Joe Louis once told an opponent who proceeded to outrun him for 12 rounds, ‘You can run, but you can’t hide.’ Louis knocked him out in the 13th round. I believe we are entering that 13th round and it will not be long before those individuals seeking to hide money overseas will be caught. This bill could be enacted by year end.”

Are you working in Tax or International Tax? If you want to grow your career or address your firm’s talent needs, contact A.E. Feldman’s President, Mitch Feldman. Find out more about tax jobs today.

Executive search firm, A.E. Feldman, is already reporting a sharp rise in demand for CFOs that fit this bill. Mitch Feldman, President of A.E. Feldman says there are currently a number of situations where corporations need CFOs urgently. “The size of the companies and the industries vary completely, but we do see a lot of movement right now,” notes Carol Schwam, CEO of A.E. Feldman.

Given the dubious economic conditions and heavy burden that CFOs must bear, however it is essential that companies find a candidate with not only the strategic acumen to identify and exploit opportunities but also the ability to work well within the dynamics of a team. This idea may be the impetus behind an emerging hiring strategy. Think “tryout” or “test drive.” Today, a growing number of CFOs are assuming their roles within a company and having their performance reviewed before being extended a permanent offer.

CFOs Play a Critical Role

Companies could benefit from encouraging more executives, including CFOs, to adopt leadership behavior that is critical to managing corporate performance not only through the current crisis, but also beyond, according to McKinsey. The group says that as the economy recovers firms should begin fostering the kind of leadership that supports innovation, risk taking and creativity.

It appears this trend is already taking shape. A September CFO.com survey of 364 Finance Executives reveals CFOs have assumed a higher profile and more strategic role.

When assessing their career opportunities the majority of CFOs surveyed by CFO.com (42%) say the recession served to further develop and highlight the importance of their financial skills. Moreover, nearly 57% of CFOs polled say their role has become more important and well respected over the past year.

Those polled by CFO.com also say the past 12 months was a greater test of their leadership and managerial skills than their financial-planning and analytical skills. Nearly 60% of the CFOs surveyed also note their role is not confined to overseeing treasury and controller functions. A staggering 87% of those polled say they now have a voice beyond business issues, including corporate strategy.

CFO Tryouts?

As companies emerge from the recession and position themselves for future growth it’s abundantly clear that CFOs have a more significant role to play. Thus, it may come as no surprise that CFOs are increasingly being put to the test before being hired.

Some recent examples of this trend include Sequenom, Inc. The company recently announced that Paul Maier has been appointed as the company’s interim CFO effective November 10, 2009, reporting directly to interim CEO and chairman of the board, Harry Hixson, Jr., Ph.D.

“I am delighted that Paul has agreed to join Sequenom as our interim CFO,” said Dr. Hixson. “His wealth of experience, including over 20 years in the pharmaceutical and biotechnology industry makes him an ideal fit for us. Paul will play an important role as we look to strengthen our financial position and strategically position ourselves for product launches and growth,” he added.

Cymer, Inc., a global supplier of light sources used in advanced semiconductor chips, also announced on October 30th that after serving as the company’s interim CFO since December 2008, Paul Bowman has been appointed to the positions of Senior Vice President, Chief Financial Officer and Secretary.

“We appreciate Paul’s financial leadership and contribution to the company during 2009 as we conducted our CFO search,” said Bob Akins, Chairman and CEO of Cymer. “Paul has distinguished himself as a very capable executive, and we believe he will continue to contribute to the success of Cymer,” noted Akins.

Natural gas company, Copano Energy LLC, also announced that Carl Luna has been named Senior Vice President and Chief Financial Officer. Luna had served as interim CFO since mid-August.

“Since stepping up as interim Chief Financial Officer on short notice in August, Mr. Luna’s performance has been outstanding, and after careful consideration, Copano’s management team concluded that he should be elected Senior Vice President and Chief Financial Officer,” said John Eckel, Copano Energy’s Chairman and Chief Executive Officer. “My fellow members of Copano’s senior management are delighted that Copano’s Board of Directors reached the same conclusion,” he added.

Additionally, Lannett Company, a manufacturer of generic pharmaceuticals, recently announced the appointment of Keith Ruck as Vice President and Chief Financial Officer, reporting to the company’s President and CEO, Arthur Bedrosian. Ruck will be responsible for managing all accounting, treasury and investor relations functions as well as assisting in new business development and M&A activities.

“Keith has served as interim CFO since March and has become a great asset to our senior management team,” said Bedrosian. “He has an extensive financial background, including oversight of Sarbanes-Oxley internal controls, and expertise in identifying areas to enhance operating efficiencies. Keith has demonstrated a willingness to take on tough challenges and I am confident in his ability to oversee Lannett`s financial management and contribute to our strategic growth plans,” he concluded.

CFOs as Consultants

The current economic climate has also pushed a number of small and medium-sized businesses that may be apprehensive about committing to a full time hire to lean on outsourced CFOs, according to the San Fernando Valley Business Journal. The report explains that companies who use CFOs on a consultancy basis can help these businesses at the macro level, “providing strategic analysis, planning for growth and reviewing key alternatives that can determine where the company is headed.”

Are you a CFO? If you want to grow your career or discuss your company’s talent needs, contact A.E. Feldman’s President, Mitch Feldman today.

The trend has triggered growing demand for CFOs with strategic acumen, according to CFO.com. Executive search firm, A.E. Feldman, is already reporting a sharp rise in demand. The firm reports that CFO jobs are opening up as a growing number of companies and private equity firms are actively seeking finance chiefs who are strong on valuing assets. Flexibility and the ability to adapt to the dynamics of the market are also critical. “The size of the companies and the industries vary completely, but we do see a lot of movement right now,” said Carol Schwam, CEO of A.E. Feldman.

When it comes to the CFO, the requirements of the job are dictated by current macro trends, according to CFO.com. The report states, “In the first years after Sarbanes-Oxley took effect, many companies wanted finance chiefs with technical accounting skills and backgrounds as controllers. When the credit crisis set in, CFOs with capital-raising skills were suddenly in demand. Now, with hope emerging that an economic recovery is on the way, having the strategic bent to identify and exploit opportunities is coming to the fore.”

While participating in the FMA of NH panel discussion, Karil Reibold, Whaleback Systems, CEO, said, “We count on the CFO position to guide the business as part of the leadership team. We are a fast growing enterprise in a competitive market, and the CFO needs to keep us on track with the right financial metrics while I manage the other facets of the business.”

Moreover, Finance Chiefs have emerged as key business partners to the CEO. Directors are leaning on CFOs’ skills and insights more now than ever before. CFOs are stepping up to help shape strategy, improve operations, and drive bottom-line results.

Thomas M. Zarrella, GT Solar, President and CEO, underscored this view at the FMA of NH panel discussion. Reuters quotes him as saying, “My CFO is my right hand, and I need that partnership to be successful. Finance is a critical part of strategy — especially in our rapidly changing industry — and the CFO should be as much a business consultant as a financial resource.”

In short, when it comes to CFOs, firms are actively seeking strategic as well as operational finance chiefs who have proven they are effective at driving value and improving profits. A recent PricewaterhouseCoopers (PwC) report shares this view, stating that CFOs must rethink and adjust their financial strategies in order to ensure that they continue to drive productivity and bottom-line performance. “Undoubtedly, CFOs should take a leading role in re-positioning the business’s finances,” the report states.

Today, CFOs must be armed with the practical insights and strategies necessary to face a volatile global economy and keep their firms well-positioned for success when the economy rebounds, according to Jeremy Seidman, Co-Chair of the MIT Sloan CFO Summit. “The world is changing, and so is the role of the CFO,” he says.

Are you a CFO? If you want to grow your career or discuss your company’s talent needs, contact A.E. Feldman’s President, Mitch Feldman today.

Today, a full understanding of transfer pricing, strategies and international tax laws and documentation is more important than ever. As a result, from supply chain restructuring, to transfer pricing planning and compliance with documentation requirements, executive search firm, A.E. Feldman says that international tax jobs are opening up. A.E. Feldman President, Mitch Feldman, also notes that talent with expertise in complex transfer pricing matters, particularly international transfer pricing controversy and Advanced Pricing Agreements (APA) among the most sought after candidates.

Sharpening the Focus on TP

Transfer pricing relates to calculating the tax due when goods or assets, including raw materials, products, and payments such as management fees and intellectual property royalties, are transferred between subsidiaries of multinational corporations. The controversy surrounding transfer pricing stems from the fact that tax authorities fear companies under price these assets to reduce their tax liabilities.

Looking ahead, Ernst & Young (E&Y) research predicts a surge in litigation as tax authorities hone in on transfer pricing in an attempt to more aggressively pursue tax revenues.

“Amid the challenges of a global economic downturn, many governments are sharpening their focus on compliance, enforcement and legislative approaches. While TP regulations were once confined to a handful of industrialized countries, they have since spread rapidly. As governments search for tax revenues to offset growing budget deficits, multinationals will have to be prepared for more TP investigations,” said John Hobster, Global Accounts Leader for Transfer Pricing at Ernst & Young.

The E&Y study reveals that the number of countries introducing both transfer pricing documentation requirements and penalty rules is rising. In fact, more than ten additional jurisdictions have introduced requirements for taxpayers to create and maintain contemporaneous documentation demonstrating the arm’s-length nature of their transfer pricing arrangements. E&Y also found that many jurisdictions have introduced increasingly hard-hitting penalties in the event of a transfer pricing adjustment, or for failure to have documentation.

Increasing Scrutiny

Budget deficits, stimulus packages and bailouts, all have significant costs. Raising revenues to cover these costs is now critical. “Raising additional revenue through taxing MNEs’ profits rather than letting someone else tax them must be an attractive thought in such times,” E&Y asserts.

Tax administrations are adapting their audit strategies and policies and developing better tools, processes and capabilities, according to the study. They are also sharing more information and adopting leading practices, sharpening their enforcement focus and carrying out more sophisticated audits. E&Y adds, “In no area of taxation is this trend more prevalent than in transfer pricing.”

Among the other key trends revealed by E&Y:

• Tax authorities are increasing their dedicated transfer pricing resources and improving their specialist capabilities.

• Jurisdictions seem to be gearing up not simply for more audits, but also for more transfer pricing penalties and for more disputes.

• Many companies have suffered a reduction in profits or undergone business restructuring as a result of the recession, which are cited as the two most common audit triggers.

• The industries that have been most affected by the downturn are the ones most actively targeted by many jurisdictions for transfer pricing audit.

• Transactions with ‘tax haven’ jurisdictions and/or major investor jurisdictions are increasingly likely to be scrutinized and formal ‘watch lists’ are becoming more common.

Managing TP More Challenging for MNEs

Meanwhile, facing greater scrutiny MNEs are forced to meet their tax obligations, often with reduced budgets and fewer resources.

As a result, the diversity of transfer pricing issues MNEs now face render traditional approaches to transfer pricing “at best difficult, and at worst impossible, to apply,” according to E&Y. “The credit crunch, a worldwide recession, and turmoil in the financial markets have brought serious, and often unforeseen, challenges to MNEs in managing their transfer pricing,” the report states.

Facing this increased scrutiny and mounting pressure, E&Y says the “effective management of transfer pricing issues around the world is more important - but more challenging - than ever before.”

Are you an international tax or transfer pricing specialist? If you want to grow your career or discuss your company’s talent needs, contact A.E. Feldman’s President, Mitch Feldman today.

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International Tax Jobs, Transfer Pricing, Executive Search Firm

Today, corporations operating globally need to have very clear transfer pricing guidelines in place ahead of any potential audits. As a result, from supply chain restructuring to transfer pricing planning and compliance with documentation requirements, executive search firm, A.E. Feldman says that international tax jobs are opening up. A.E. Feldman President, Mitch Feldman, also notes that talent with expertise in complex transfer pricing matters, particularly international transfer pricing controversy and Advanced Pricing Agreements (APA) are among the most sought after candidates.

Tax Authorities Seeking Revenue

Transfer pricing is the pricing of sales between subsidiaries of a multinational corporation with the intent of minimizing taxes by reporting profits in jurisdictions with relatively low corporate tax rates. The practice has been the subject of controversy for nearly two decades. Today, however, facing mounting pressure to find new and additional sources of revenue, governments around the globe are taking a harder line on the taxation of transfer pricing, according to CFO.com. The report calls the trend, “another unwelcome side effect of the global recession: hungrier international tax authorities.

A growing number of governments are jumping on the bandwagon, according to Forbes. The report lists several recent examples, including Japan where Takeda Pharmaceutical, Honda and Sony have all been targets of local tax authority investigations over transfer pricing, citing the Nikkei Report.

Today, even China and India are looking to fill their coffers by squeezing more from U.S.-based multinationals on sales between subsidiaries, notes CFO.com. The report points out that last year, China’s tax authorities issued new rules requiring foreign multinationals to submit extensive transfer-pricing documentation by year-end. More recently, the report adds, they circulated a notice to local tax authorities urging rigorous enforcement on a variety of business-tax issues, including transfer pricing.

China isn’t alone. CFO.com quotes Garry Stone, global transfer-pricing leader for PricewaterhouseCoopers, as saying, “There’s an explosion of transfer-pricing controversies out there.” Stone adds the number of such disputes among his clients doubled over the past year, lead by India, Canada, Turkey, and Greece.

The U.S. is no exception. Although, as Raymond Baker, Director of Global Financial Integrity, a non-profit in Washington, D.C., points out to Forbes, “the IRS accepts a handful of formulas for determining acceptable intra-company transfer prices, all of which can be manipulated within a certain acceptable range,” the IRS is currently maintaining an aggressive approach to transfer pricing. In fact, the IRS contends the abuse of the tactic deprives federal coffers of billions of dollars in tax revenue each year. Stone told CFO.com he understands the IRS is adding 1,200 people to its international staff this year, while the 2010 budget accounts for another 800.

Transfer Pricing Increased Source of Risk

Amid these developments, transfer pricing has become an increased source of risk for multinational companies of all sizes. The New York Times has reported that curtailing transfer-pricing arrangements could force a slew of corporations to pay large amounts in back taxes and penalties.

“Abusive transfer pricing is becoming more important in the global agenda, and that has not yet satisfactorily trickled into the thinking of multinational corporations,” Forbes quotes Baker as saying. “The reputational risks [of getting caught] are enormous. Shareholders need to know this.”

As a result, Stone told CFO.com that more companies are seeking Advance Pricing Agreements. He also warns that updated documentation and clear explanations of methodologies are critical.

Are you an international tax or transfer pricing specialist? If you want to grow your career or discuss your company’s talent needs, talk with A.E. Feldman’s President, Mitch Feldman.

Executive search firm, A.E. Feldman, is on top of the trend. The firm’s President, Mitch Feldman, says his firm is in a position to assist accounting firm executives of all sizes with their merger goals. Feldman adds that his executive recruiters have the experience, contacts and discretion necessary to help partners find greater stability amid economic uncertainty and better opportunities as industries evolve. Carol Schwam, A.E. Feldman’s CEO, also notes that they are working with all ranges of practices and currently placing groups, or lift-outs as well as solo practitioners. “There are also shifts happening,” she adds. “Firms are also seeking Partners with expertise in different areas of business.”

CPA Firms Growing

The 2009 PCPS CPA Firm Top Issues Survey, a bi-annual study that identifies the most significant challenges facing accountants across the country, shows that that there are bright spots for accounting firms of all sizes – even in these uncertain economic times.

When asked about the economy’s greatest effect on them, a solid proportion of firms with 20 or fewer professionals picked “no impact.” A number of firms, including more than 10% of firms with 10 or fewer professionals, said that additional client services were one result of the economic crisis. Moreover, when projecting expected revenue in the year ending May 2010, roughly 45% to 60% of every firm segment expected some growth. Overall, the study also found, it’s safe to conclude that CPA employment should remain steady going forward.

When planning ways to generate new business in a tough economy, increasing service to existing clients was the top choice of virtually every firm segment. Now, a growing number of firms are using mergers as a means to do just that.

Merger Mania

Parente Randolph and Beard Miller Co. announced plans to merge later this year to create one of the largest accounting firms in the Northeast, with a total $175 million in revenue. The combined firms will include 172 partners and over 1,200 staff in Pennsylvania, New York, New Jersey, Maryland, Delaware and Texas. The firms say their new name will be announced when the merger closes in the fourth quarter.

“Our new firm will have even deeper resources and broader areas of expertise to serve our clients, including more industry-specific expertise, specialized tax consulting and other business advisory resources,” said Beard Miller, Chairman and Chief Executive Lamar Stoltzfus, who will serve as chairman of the new firm.

“While already thriving in our respective markets, by combining our practices, we will be able to offer a broader array of industry expertise to our clients,” added Bob Ciaruffoli, Chairman and CEO of Parente Randolph, will serve as CEO.

Meanwhile, two Louisville accounting firms are merging into what promises to be the city’s largest accounting firm, ranked by number of accountants, according to BizJournals.com. The report states that Principals with Chilton & Medley LLP and Mountjoy & Bressler LLP have signed a memorandum of agreement to merge the two firms. The deal is scheduled to close November 1st. The new firm will be called Mountjoy Chilton Medley LLP.

Accounting and consulting firm Sikich LLP also recently announced it has acquired Levi Littell Herbst & Co., a boutique M&A advisory firm that specializes in transactions under $100 million in value. Managing directors Laurence W. Levi and Richard A. Herbst will join Sikich as partners and bring all of their staff with them. Levi Littell Herbst & Co. will be integrated into Sikich’s existing investment banking group and will operate under the Sikich name, but Levi Littell’s offices will remain in Chicago and New York.

“The talent in our group and our ability to leverage existing resources puts us in an even better position in the middle market to serve our clients,” said Christopher Geier, Partner-in-Charge of the Investment banking practice at Sikich.

Mowery & Schoenfeld, an accounting, tax and consulting firm based in Lincolnshire, Illinois, announced in August it entered into a strategic alliance with the principals and other accountants of Katch, Tyson & Company. The transaction made Mowery & Schoenfeld one of the area’s largest firms focused on serving the business and financial advisory needs of mid-sized businesses.

“We recognize that the next step for our organization was to expand by adding additional accountants of comparable quality that would enable us to expand services to our local, regional, and national clients, as well as provide more career opportunities for our people,” said Managing Partner Ronald Katch. “Mowery & Schoenfeld shares our client philosophy of helping our middle-market clients grow and succeed, and the affiliation will broaden and deepen our existing industry and functional specialization, enabling us to offer more comprehensive business advice tailored to our clients’ needs,” he added.

Accounting firm Plante & Moran announced a merger with Jackson, Rolfes, Spurgeon & Co. in July, extending Michigan-based Plante to the Cincinnati market.

“Cincinnati is an important market for us,” said Plante & Moran’s Managing Partner, Gordon Krater. “It rounds out our footprint in Ohio.” Plante also has offices in Toledo, Columbus and Cleveland, and Krater now plans to double the size of the Cincinnati office in two years.

Two more accounting firms in the Bay Area - Smith, Lange & Phillips LLP and Daoro Zydel & Holland LLP - combined forces in July, according to WebCPA.com. The new firm operates under the name DZH Phillips LLP and includes 10 partners, more than 70 team members, and $12 million in annual revenue.

“This is a positive, exciting step for us,” said Ryan M. Svoboda, Managing Partner of the combined firm. “The goal with our merger was not simply to increase our size, but also to address our clients’ growing needs with a broader scope of services, talent and expertise. Joining forces with DZH will allow us to accomplish this,” he added.

Accounting firm LarsonAllen has also expanded its presence in Arizona by combining with Scottsdale-based Cronstrom, Osuch & Co. “By joining LarsonAllen, we will be able to offer our clients a wider range of services including benefits, information security, and valuation and forensic,” said Cronstrom Osuch Founding Principal, Sandy Cronstrom.

Now, as more CPA firms prepare to navigate through the myriad of changes and processes that accompany the consolidation process, A.E. Feldman, says it is poised to assist management with their firm’s goals.

If you are a partner in an accounting firm, talk with A.E. Feldman’s President, Mitch Feldman about merge opportunities or moving to a better situation today.

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The trend may be one reason why demand for global tax professionals is strong. Executive search firm, A.E. Feldman, says that Tax Manager to Partner jobs remain hot right now. Firms are competing for experienced candidates who can navigate the intricacies of statutory reporting and tax compliance, forge cultural and political alliances, and create key operational strategies while mitigating risk. A.E. Feldman’s President, Mitch Feldman, says professionals who are able to master the global aspects of business are in high demand.

Tax Advice Goes Global

A recent report by the Society of Trust and Estate Planners (STEP) reveals tax advice must span many countries and jurisdictions, according to International-Advisor.com. The report found that more sophisticated “global” tax planning is required to meet the increasingly complex needs of high net worth individuals (HNWIs). Furthermore, intermediaries who are able to provide tax advice on a global, rather than local, basis will have a clear competitive edge.

“Clients want home country compliance and international tax neutrality to avoid additional layers of tax,” the report quotes Keith Johnston, Director of policy for STEP, as saying.

The STEP research also identified several key trends, including the “Transparency Dividend,” which will see the distinction between offshore and onshore disappearing as tax competition between all countries heats up.

The “Minefield” of Tax Rules

Meanwhile, in today’s global business environment, multinational corporations must navigate what one expert calls a virtual “minefield” of U.S. and foreign tax rules affecting cross-border business.

In a recent interview with Smart Business, Doug Wright of Burr Pilger Mayer LLP says companies must plan ahead. “Effective upfront international tax planning can reduce a company’s global tax costs by minimizing the potential for paying double taxes to a foreign jurisdiction and the U.S.” Wright adds that, “An effective global tax strategy will balance U.S. and foreign tax considerations in the context of a company’s broader business and financial objectives. This translates into increased after-tax cash flow, increased after-tax earnings and financial statement benefits, and ultimately increased shareholder value.”

International taxation, however, has grown increasingly complex. According to Wright, “The various U.S. and foreign taxing jurisdictions are all seeking a bite of the same cross-border revenue apple. They have become increasingly proactive and diligent in pursuing collection of what they consider to be their ‘fair share’ of a company’s cross border revenues.” In short, widespread and complex international tax and transfer pricing rules are constantly changing, resulting in what Wright calls “a major minefield for uninformed companies.”

Amid the trend, multinational companies must develop a global tax strategy that does not impede global business objectives. “Companies that are not familiar with international tax rules, cross-border transfer pricing requirements and double tax treaties are much more likely to suffer unnecessarily high global tax costs, including increased tax compliance burdens and tax penalties,” Wright warns.

Now, as multinational companies seek effective global tax strategy, A.E. Feldman says the demand for tax professionals with expertise in the global aspects of business will continue to grow.

Are you working in Tax or International Tax? If you want to grow your career or address your firm’s talent needs, contact A.E. Feldman’s President, Mitch Feldman. Find out more about accounting jobs today!

Berman specifically notes that China’s infamous track record for IP infringement costs U.S. creative communities anywhere from $2.2 to $3.5 billion in each of the past four years. He is pushing Chinese authorities to impose stiff fines and meaningful criminal penalties for IP theft.

China routinely ranks among the world’s top offenders in evaluations of global IP, including the Office of the U.S. Trade Representative’s (USTR) “Special 301″ report. The Report is an annual review of the global state of intellectual property rights (IPR) protection and enforcement.

The 2009 “Special 301″ Report, which examined IPR protection and enforcement in 77 countries, highlights positive accomplishments, such as sustained efforts by trading partners such as the Republic of Korea (Korea) and Taiwan. The report also reveals continuing serious concerns over IP infringement in countries such as Russia, Algeria, Argentina, Canada, Chile, India, Indonesia, Israel, Pakistan, Thailand and Venezuela. China, however, currently tops the USTR’s Priority Watch List concerning intellectual property rights violations.

The 2009 “Special 301″ Report states, “While the Chinese Government continues to provide increased attention to the IPR environment, the shared goal of significantly reducing IPR infringement throughout China has not yet been achieved.” The Report concludes, “China’s IPR enforcement regime remains largely ineffective and non-deterrent.”

The USTR notes, however, the Chinese Government is currently considering legal and policy changes in areas such as the scope of compulsory licensing of patented inventions, the treatment of IPR in setting standards, and other areas that have the potential to affect IPR protection and market access for IPR-reliant goods and services.

China enacted the Third Amendment to its Patent Law in 2008. The USTR says although the changes, which go into effect on October 1, clarify and improve many areas of the Patent Law, rightsholders have already raised a number of concerns. This comes as no surprise given the fact that the significance of IP and intangible assets in today’s economy cannot be understated.

The Economics of IP

Economists estimate that two-thirds of the value of large businesses in the U.S. can now be traced to intangible assets. Moreover, a 2007 study, Intellectual Property - Intensive Manufacturing in the United States by Robert Shapiro and Nam Pham found that the market value of U.S. companies was now based on intangibles, such as patents.

International patent filings under the World Intellectual Property Organization’s (WIPO) Patent Cooperation Treaty (PCT) grew by 2.4% last year, to nearly 164,000 applications, according to WIPO. According to the group, while the rate of growth was modest, as compared to an average 9.3% rate of growth in the previous three years, the total number of applications for 2008 represents the highest number of applications received under the PCT in a single year. WIPO concludes continued use of the PCT indicates that companies recognize the importance of sustained investment in research, development and innovation to remain competitive even within challenging economic conditions.

Inventors from the Republic of Korea (+12.0%), China (+11.9%) and Sweden (+12.5%) enjoyed robust growth rates in their filing of PCT applications in 2008, reports WIPO. The largest number of international PCT applications (just under a third of the total for 2008 or 32.7%) was filed by inventors in the U.S., maintaining a top ranking that has spanned roughly three decades.

“Economic crises have, in the past, been a catalyst for innovation as greater emphasis is placed on improving standards of efficiency, doing more with less and identifying and developing smarter business solutions,” said Mr. Francis Gurry, Director General of WIPO in a statement. “In the current economic climate, technology, innovation and creativity are critical in creating opportunities for economic renewal and addressing pressing global issues such as climate change,” he added.

IP Enforcement Critical Challenge

Today, however, IPR enforcement remains a critical challenge facing companies. A patent for an invention is the grant of a property right to the inventor, issued by the U.S. Patent and Trademark Office. Without an enforceable patent, however, no one will invest in an idea. IP owners must be able to license, cross-license, sell their IP rights or enter into joint ventures. The value created by licensing, cross-licensing, selling IP rights or entering into joint ventures, hinges upon the belief that the patent can be enforced.

Facing the growing threat of IP theft at home and abroad, particularly Asia, executive search firm, A.E. Feldman, reports that corporations are increasingly looking to corporate security experts to identify and help prevent this crime. The recruiting firm is already addressing this growing need and is currently working with the industry’s leading fraud specialists.

Are you working in intellectual property or corporate security? If you want to grow your career or discuss your firm’s talent or security needs, contact A.E. Feldman’s President, Mitch Feldman, today.

Now, as tax authorities aggressively audit corporations and use penalty provisions in the tax law to encourage compliance, transfer pricing has become a top priority for multinational companies. Executive search firm, A.E. Feldman, says international tax jobs are opening up. The firm, which is currently working with the investment advisory community on transfer pricing matters, says clients are seeking talent to ensure that their exposure to double taxation, penalties and interest is minimized and their transfer pricing policies contribute to a sound international tax strategy.

Transfer prices are prices that multinational corporations charge for goods, services, and tangible and intangible assets they trade with their subsidiaries and other related entities. These transfer prices are set internally by management. They are not the same as fair market value…and they are frequently subject to scrutiny by both the IRS and the Canadian Revenue Agency (CRA).

Although both Canada and the U.S. use the “arm’s length standard” when evaluating transfer prices for tax purposes (meaning all transactions between the subsidiaries should be priced as if the transaction was conducted between two unconnected parties) and both tax authorities require companies to have documentary evidence supporting their transfer prices, they disagree over which transfer pricing methods are acceptable.

When there are differences in the substantive application of transfer pricing rules, there is significant potential for double taxation – which is by far the biggest impediment to cross-border trade, according to Trauman who is also the principal drafter of the paper, “American Bar Association Section of Taxation Comments Regarding Transfer Pricing as Related to Enhancing Canada’s International Tax Advantage.” Trauman notes there are certain issues that commonly arise regarding the application of Canada’s transfer pricing rules, in particular, that make the potential for double taxation more significant. In short, he says, the Canadian Revenue Agency (CRA) and the IRS must bridge the gap in the interpretation of transfer pricing principles.

Meanwhile, both the CRA and the IRS have increased their emphasis on transfer pricing audits, according to Thomas B. Akin, Edwin G. Kroft and Deborah J. Toaze of McCarthy Tetrault. In a report on FindLaw.com, they state that, “there is some evidence that Canada’s relationships with revenue authorities of other countries, in particular the United States, are currently strained. Some practitioners have noted a lack of willingness on the part of the CRA to be reasonable in negotiations, a reluctance to recognize the validity of positions of the other revenue authority and even a lack of good faith in negotiations.” They add that this development may lead to the use of litigation as the preferred method to resolve disputes.

The CRA and the IRS should work to come to terms on how to mutually interpret transfer pricing principles consistently in a practical way, argues Trauman. The ABA Section on Taxation’s paper states “This interpretation should be memorialized in a competent authority agreement to provide taxpayers with clear guidance as to what is reasonable and appropriate, and avoid the prospect of double taxation. Such an agreement would allow both governments to more quickly resolve existing and future cases.”

Amid the debate, any organization, including many U.S. companies, eying the Canadian marketplace for expansion opportunities, would be well advised to integrate transfer pricing into strategic business planning, according to the Federation of International Trade Associations (FITA). The group states that Canada, like many other high-tax jurisdictions, “has noted a worrying increase in capital moving out of this country and into low-tax jurisdictions and tax havens.”

The FITA concludes that any company which transacts business involving goods, services or intangibles with related parties across Canada’s borders “needs to adopt proactive strategies in order to avoid problems and penalties with the Canada Customs and Revenue Agency (CCRA). All of the benefits along with the reduced risk of disputes and penalties are good reasons to adopt a strategic approach to transfer pricing.”

Are you an international tax or transfer pricing specialist? If you want to grow your career or discuss your company’s talent needs, contact A.E. Feldman’s President, Mitch Feldman today.

The high price American workers and businesses are paying due to the global theft of U.S. intellectual property - particularly in Asia – cannot be ignored, especially in these times of economic turmoil. Right now a growing number of corporations are seeking corporate security experts to identify and help prevent IP theft both at home and abroad. Executive search firm, A.E. Feldman, is on top of the trend and is currently addressing this need with the industry’s leading fraud specialists.

High Price of IP Theft

Amid the recession, the copyright industries are critical to the U.S economy, according to Bacchus. He states that in 2007 alone, 11.7 million Americans were employed, directly or indirectly, in the copyright industries. That translates to about one in 12 of all American workers. Foreign sales of the copyright industries also totaled $126 billion in 2007- far surpassing foreign sales of such other vital American industries as aircraft, automobiles, agriculture and pharmaceuticals.

Overall, U.S. intellectual property is worth $5-5.5 trillion - more than the gross domestic product (GDP) of any other country, according to “The Economic Value of Intellectual Property,” USA for Innovation. The U.S. Department of Commerce also reports that IP accounts for more than half of all U.S. exports.

That said, the damage done to American workers and businesses by global piracy of the intellectual property of the U.S. copyright industries cannot be exaggerated. Counterfeiting and piracy have resulted in the loss of hundreds of thousands jobs in the U.S., according to U.S. Customs and Border Protection. In fact, the U.S. Federal Trade Commission says the auto industry could hire 250,000 additional workers if the sale of counterfeit auto parts was eliminated.

Moreover, illegal software in California alone cost software vendors more than $1.3 billion last year - the highest of any state, and higher than the national figure for 98 other countries. And in fiscal 2008, the U.S. Customs and Border Patrol reports that China alone accounted for 81% of the total domestic value of $272.7 million in seized counterfeit or pirated goods, according to Crain’s Detroit Business.

Making Strides to Protect IP Rights

Back in June, the U.S. Chamber of Commerce applauded the passage of the Foreign Relations Authorization Act (H.R. 2410) sponsored by Foreign Affairs Committee Chairman Howard Berman, according to the Global Intellectual Property Center an Affiliate of the U.S. Chamber of Commerce. The measure furthers IP enforcement as a key component of U.S. foreign policy.

“This legislation will play a vital role in efforts to protect job-creating intellectual property abroad,” said Mark Esper, Executive Vice President of the Chamber’s Global Intellectual Property Center (GIPC). “Through increased IP enforcement and an emphasis on protecting IP rights in climate change negotiations, America’s foreign policy efforts will focus on protecting jobs and strengthening our economy.”

A new World Trade Organization (WTO) ruling has also confirmed most of the American claims against China on market access relating to trading rights, services, and goods, notes Bacchus. “With this verdict in hand, American copyright holders and producers will be able to penetrate, and to compete, much more successfully in the rapidly growing Chinese market. And, with implementation proceeding in an earlier decision this year in a companion case in the WTO, they should be able to do so with greater assurance that their intellectual property rights will be respected in the Chinese marketplace,” he wrote.

There is also, in this case, an added incentive, argues Bacchus. “Increasingly, China’s leaders understand that China cannot hope to harness the boundless creativity of the Chinese people, and transform it into lasting prosperity, unless China joins other nations in protecting intellectual property rights. Intellectual property is the crystallization of creativity that inspires economic growth,” he concluded.

Are you working in corporate security? If you want to grow your career or discuss your firm’s talent or IP security needs, contact A.E. Feldman’s President, Mitch Feldman, today.