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600 GE tax professionals moving to PwC
The arrangement could be a model for other companies.
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About 600 of GE’s global tax professionals will soon have a new employer: PwC.
The industrial giant and the Big Four firm announced the deal to transfer the employees.
The move will enable PwC to expand its tax service line while retaining GE as a client. And it enables GE—which files more than 5,500 tax returns annually in more than 300 jurisdictions—to cut costs and focus on core operations. The agreement, which is renewable after five years, takes effect April 1.
The arrangement could become a model for other companies, particularly those that want to shift fixed employee costs to a more variable model. And it could provide a blueprint for other ways accounting firms can partner with clients.
“It increases our skill set and broadens our competencies, not only in the U.S., but around the globe,” Mark Mendola, CPA, vice chairman and U.S. managing partner at PwC, said in an interview. “There are tax issues cross-border every day.”
Global tax strategy is becoming more important for multinational companies as countries seek to prevent their shifting of profits to low-tax jurisdictions.
The Organisation for Economic Co-operation and Development (OECD) has adopted a 15-point Action Plan on Base Erosion and Profit Shifting (BEPS) that requires large multinational enterprises to report income and taxes paid on a country-by-country basis and facilitates automatic exchange of information among tax authorities. All OECD and G-20 countries have committed themselves to requiring country-by-country reporting for multinational companies, and the United States has issued final regulations requiring the reporting, effective for tax years beginning on or after June 30, 2016.
The Treasury Department has also focused on preventing corporate inversions, in which a multinational company based in the United States replaces its U.S. parent with a foreign parent, usually in a low-tax jurisdiction. This effort has resulted in several new rules that impose new compliance and planning obligations on multinational companies.
