This week’s International Treasurer editorial meeting highlighted several topics we’ll be looking at over the next few weeks and months. These include a look at pension management (and a pension webinar the NeuGroup will conduct next week) as well as managing tax and in-house banking entities in so-called tax-haven areas. Also, IT will look at INR invoicing and the opportunities for hedging.
Pension webinar
While the trend in corporate pensions has been to freeze or stop offering them, there remain many companies still managing active pensions. Even freezing a pension doesn’t absolve a company from its duty to manage what assets and liabilities remain. We’ll take a look at what companies are doing in this area.
The NeuGroup will also conduct a webinar on pension management later in July. Topics include asset allocation in defined benefit (DB) plans and pension risk management. Asset allocation of course is a key component to the overall DB plan’s performance, funded status and funding volatility. Also, in recent years plan sponsors have become more interested in reducing DB plan risk. The fiduciary responsibilities for pension plan decision makers extend beyond the investment allocation and selection. Pension plan decision makers must make countless decisions beyond this scope with many of these decisions impacting the enterprise value. We’ll take a look at how companies are getting this done.
Tax haven taint
We’ll take a look at the how companies are restructuring their tax setups to avoid the perception of tax avoidance. Congress and the IRS have continued to accuse companies of artificially shifting profits from high-tax to low-tax jurisdictions using a variety of techniques.
One recently came to light when an investigation by Congress found that Apple allegedly avoided paying income taxes on billions of dollars of profit during the past several years by moving patent rights to a web of offshore subsidiaries that pay virtually no income taxes.
As a result of the scrutiny, companies are taking a look at tax substance requirements – i.e., whether a company has its effective place of management, e.g. board meetings, sufficient personnel and functions, in the subsidiary.
INR Invoicing
At a recent meeting with the NeuGroup for Asia regional treasurers in Singapore, banks sponsors pointed out several opportunities for multinationals to take advantage of recent liberalization of currency controls in India. These opportunities can be easily overlooked as India has not done as good a job as China in implementing its changes and working with multinationals to implement them. Unfortunately India’s liberalization of the rupee has been overshadowed by the more aggressive rollout of renminbi. As a result, almost no one has been talking about the fact that the INR is also being traded outside India. Yet, the fact that it is creates several notable opportunities for multinationals.