Navigating the complexity of tax modelling
The tax implications of existing business and transfer pricing operating models can change due to new tax rules. Understanding fully how proposed tax legislation may affect an organization entails a modelling exercise. Robust tax models allow organizations to evaluate opportunities and risks and make better informed tax and strategic decisions.
How we can help with tax modelling?
Our tax modelling specialists can build models which:
- Allow you to quantify the tax effect of different business structures
- Quantify how new tax rules may impact your existing operating model.
We can assist you in the following areas:
- Building dynamic, state-of-the-art Excel-based models to evaluate tax scenarios in the context of M&A, divestments, or other corporate restructurings.
- Quantifying the tax effects of new transfer pricing policies.
- Modelling the impact of proposed tax legislation on an existing business case.
Building an effective tax model, whether it is to evaluate the tax implications of a transaction, a new business opportunity or for other purposes, is a difficult task. Clients also require tax models to be free from logical errors. Our professionals can help with the model review, maintenance/update and model building activities. This ensures that your tax and business decisions are based on a robust and informed analysis.
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FAQ
What is tax modelling and when is it used?
Tax modelling involves developing financial and tax models to assess the impact of different transactions, investments or business structures. Organizations use tax models in a variety of situations, including business restructurings, mergers and acquisitions, financing arrangements, transfer pricing projects and the implementation of new tax legislation. By analysing multiple scenarios, businesses can make more informed decisions and identify potential tax risks at an early stage.
How does tax modelling support transfer pricing and international business structures?
Tax modelling helps organizations understand the tax and financial implications of international business structures and intercompany transactions. By using modelling techniques, companies can assess the impact of different transfer pricing methodologies, financing arrangements and operational scenarios. This supports a consistent application of the arm’s-length principle and provides a stronger foundation for defending tax positions before tax authorities.
Why is scenario analysis important in tax modelling?
Tax legislation, market conditions and business operations are constantly evolving. Scenario analysis enables organizations to evaluate the potential impact of different developments before they occur. Examples include changes in tax rates, interest rates, profitability, financing structures or international tax regulations. By modelling multiple scenarios, businesses can better anticipate future developments, identify opportunities and manage tax risks more effectively.
