Several topics came out of this week’s International Treasurer editorial meeting, including a look at coming tax issues, (non-European) crisis preparation and choosing the right treasury technology.
Taxes taxes. While taxes and the future of rates are always on the minds of treasurers, Obama’s reelection has at least given some clues as to what could happen in next several years; some good, some bad. Companies are expecting corporate tax rates to be reduced – from the current 35 percent to something along the lines of 28 percent. But at the same time, idle overseas corporate profits – about $1.7tn by most estimates – could end up being taxed at a much higher than they are currently; this will be bad for tech and pharma companies, both of which have most of their cash overseas.
On top of this, tax authorities around the world have been banding together to better coordinate on transfer pricing and other issues. Therefore, treasurers will be working hard with others in the company to make sure they have the proper tax strategy in place.
In terms of how the tax debate will play out, some observers at a recent NeuGroup Tech20 Treasurers’ peer group meeting said all eyes will be on who the next treasury secretary will be. If it’s Jack Lew, who, according to Fox Business News, is the front runner, it doesn’t bode well. If it’s former Democratic Senator and namesake of the Simpson-Bowles National Commission on Fiscal Responsibility and Reform, then it could inch the Democrats and the GOP closer to a grand bargain. Mr. Lew, currently Obama’s chief of staff, is seen as a partisan player and not ready for compromise. Former Sen. Bowles is seen as too moderate and, according to Fox, now out of contention.
We’ll take a look at what companies are preparing for and how they might recalibrate their tax strategies to fit certain scenarios.
Other Crisis Prep. Also discussed at the Tech20 meeting was business continuity. One company is prepping for the worst when it comes to natural disasters. What with the recent spate of so-called 100-year storms and other disasters ripping across the globe, companies are thinking about how to keep business going when there are floods, quakes, storms, electricity outages or nuclear meltdowns.
The Right Tech. While it’s always good to get the best technology to help treasurers manage the company’s cash, it’s wise to figure out first if the technology the company plans on implementing can actually be supported. In other words, do you have the resources to match the implementation demands? To match the ongoing maintenance?
Treasury: Communications Hub. Treasury has been for a while expanding its role and in many directions. But according to one member of the Tech20, this role has expanded to being a communications or information hub when it comes to big company projects like an acquisition or spinoff; it seems treasury is seen as most knowledgeable when it comes to issues related to both projects. Therefore, treasury can help companies work through issues by offering their own expertise or if unable, knowing where that expertise resides.