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Accuracy is very important in the preparation of income tax returns. An error may result into a tax audit which will lead to significant professional fees. If the accountant offers Audit Shield, grab it because it for your own protection. Even giant tech companies are not spared from tax audits initiated by governments.
In an article printed opposite the editorial page of a German newspaper, Olaf Scholz, German minister of finance explains his proposal of a global minimum rate of corporate tax to ensure that multinational companies like Apple will pay domestic taxes according to the profits earned.
The European Union has long been attempting to require tech giants to refrain from using overly complicated accounting tricks to shuffle profits and minimize the taxes they pay to each government. Scholz’s Welt am Sonntag article is part of the larger effort to harmonize tax rates across the European Union. EU has member countries that have lower taxation levels like Ireland.
In the article, Scholz said that a worldwide minimum tax level is important with no state going below it. He particularly noted the exacerbation of internet economy which is a problem resulting from globalization. What the EU is trying to address is the placement of profits in low-tax locations.
This is not actually the first effort to introduce reforms in taxation so that companies can be stopped from shifting around their profits to avoid paying tax. Last August 2016, Apple received a tax bill amounting to 13 billion Euros ($15.5 billion) from the EU. It was claimed that Apple took advantage of illegal state aid which allowed the company to route its profits to Ireland. Apple paid the amount in full but it will be held in escrow while matters are being settled in court. Apple executives insist that they are paying every cent of all global requirements.
Accountants were happy when Audit Shield was introduced because they have insurance to offer their clients. Tax audit insurance is a protection against the significant professional fees that can be incurred by the client when the tax returns are audited. The audit process can be time consuming and expensive depending on the complexity of the tax issue.