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BEPS 2.0 readiness is top of mind for CFOs - Industry roundup: 3 July

BEPS 2.0 readiness is top of mind for CFOs

The rapidly changing regulatory landscape is creating a significant challenge for tax and finance departments, according to the latest EY Tax and Finance Operations Survey (TFO). Amid these challenges, tax and finance functions face potential budget cuts due to a turbulent economic environment while still simultaneously transforming their functions.

The survey polled 1,600 CFOs, heads of tax and finance professionals across 32 jurisdictions and found that while a growing number of tax and finance functions are transforming – 96% of businesses compared to 84% five years ago – the pressures faced are becoming more intense and urgent.  

Many large global businesses are bracing for sweeping reforms as governments implement the Organisation for Economic Co-operation and Development’s (OECD)/G20 base erosion and profit shifting (BEPS) 2.0 rules, including global minimum taxes under Pillar Two. The survey finds that 90% of respondents expect to experience a “significant” or “moderate” impact from BEPS 2.0, but only 30% have completed a BEPS impact assessment.

Beyond BEPS 2.0, many other compliance complexities pressure tax and finance functions. These include the US corporate alternative minimum tax, green and sustainability taxes, the EU’s Carbon Border Adjustment Mechanism and an accelerating pace of countries converting to e-invoicing. Finally, businesses also face a sharp uptick in formal and informal requests from authorities for tax and finance information.

“We are in the middle of an unprecedented overhaul of a century old ‘global tax code’ driven by many factors, including digital, the economy, geo-politics, a movement to green and clean, and much more,” said Marna Ricker, EY Global Vice Chair – Tax. “Tax leaders need to consider transforming their tax and finance functions by leveraging data and the latest technologies. Those who do will probably have an easier time complying with changing laws and regulations and their tax and finance functions may be better positioned to provide more strategic value to their organisations.” 

UK business confidence rebounds to 13-month high

Business confidence bounced back in the first half of June, increasing by nine points to 37% in the Lloyds Bank Business Barometer. This represents the most significant monthly rise since March 2023. Despite last month's interest rate rise, the increase was primarily driven by rises in firms' view of their trading prospects and optimism on the broader economy. 

Business confidence gains were also seen across all four main industry sectors (manufacturing, construction, retail and services). The survey occurred before the Bank of England increased the base rate by 50 basis points in June.

For firms’ trading prospects, 55% of firms (up six points) anticipate more robust business activity in the next twelve months, compared with 14% (down one point) expecting weaker outcomes. This results in the net balance increasing seven points to 41%, the first improvement in three months. 

Some 54% (up six points) expressed greater optimism about the economy, while 22% (down four points) were more pessimistic. That means the net balance increased by 10 points to 32%, significantly climbing from -3% in November 2022.


Mastercard looks to enable tokenised bank deposits

Mastercard has announced the launch of the Multi Token Network (MTN), a set of foundational capabilities designed to make transactions within digital asset and blockchain ecosystems secure, scalable, and interoperable – ultimately enabling more efficient payment and commerce applications. Beginning in Q3 2023, the beta version of MTN will be available in the UK and act as a testbed for developing live pilot applications and use cases with financial institutions, fintechs and central banks. Tokenised bank deposits will power the first phase of the applications. Over time, Mastercard plans to make MTN available in additional markets worldwide.  

The solution has four pillars of trust that aim to meet four industry needs, the first of which is trust in counterparty. Effective identity management and permissions are essential to building trusted networks. Mastercard Crypto Credential offers a set of common verification standards and infrastructure, in turn enabling trusted interactions among businesses and consumers using blockchain networks. Mastercard is already working with several partners on an initial project to enable transfers on public chains, and the firm’s recent work in the Australian CBDC pilot uses the same technology to secure CBDC transactions on public blockchain. 

The second pillar is trust in digital payment assets. Stable, regulated, and scalable payment tokens are essential to powering payment applications. Last year, Mastercard tested tokenised commercial bank deposits between several financial institutions, settling through its existing network. The company also joined a group of market participants to explore a tokenised deposit platform through the Regulated Liability Network (RLN) concept. MTN will support and complement these efforts by enabling regulated payment tokens to power financial applications. 

Next is trust in technology. The scalability of blockchain networks and interoperability among them are critical technologies required for the safe transfers of tokens and assets. Mastercard’s work with the Reserve Bank of Australia (RBA) in partnership with Cuscal Payments and Mintable on its CBDC pilot demonstrates how CBDCs issued by the RBA can be used to make seamless purchases of assets from allow-listed entities on the public blockchain. MTN aims to offer these capabilities across all supported payment tokens and networks in a scalable manner.

The final pillar is trust in consumer protections. MTN will draw on Mastercard’s experience in developing standards and rules for its card network to provide a common framework for a community of users with shared interests. This includes clear rules of the road that prioritise strong consumer protections, stability, and regulatory compliance.


ABN Amro upgrades trade finance automation

Norwegian software vendor Commercial Banking Applications AS (CBA) has confirmed that ABN Amro has gone live on the latest version of its IBAS Global Trade Finance Factory solution (IBAS GTF), which the bank uses to run its global trade finance operations. The go-live follows the signing of a five-year agreement between the two.

The new release of IBAS GTF ensures all trade finance payments are routed to the bank’s central payment hub in full compliance with ISO 20022 CBPR+ standards. It also supports all other recent SWIFT updates, including features for handling counter-guarantees and standby LCs. In the future, ABN Amro will use RESTful APIs built by CBA to enrich customer experiences and deliver convenient customer journeys.

“The successful roll-out marks the first deliverable of our renewed five-year partnership,” commented Burak Aslan, Lead Product Owner, Personal & Business Banking, Transaction Banking and Trade Finance at ABN AMRO. “As a result of our close collaboration we expect to benefit from increased efficiency and automation, lower operational risk and a reduction in our total cost of ownership. The new developments will allow us to onboard new customers more quickly and further improve the customer experience, putting us in a good position to scale our global trade finance operations.”


Amadeus and Emburse aim to simplify T&E for global corporates

Travel technology company Amadeus and spend optimisation firm Emburse have formed a strategic partnership to better address the business travel demands of global enterprises. The partnership aims to ensure a seamless experience from trip planning and booking through to expense reporting, reconciliation, reimbursements and spend analytics.

The two companies can now deliver a fully integrated solution to new customers and offer each other’s solutions to current customers. Amadeus will promote Emburse Chrome River as a recommended integrated expense management offering to corporations in the US and specific European markets (UK, Scandinavia and Benelux). At the same time, Emburse will add Cytric Travel and Cytric Easy for Microsoft Teams to its portfolio of travel spend optimisation solutions.

The pair say their partnership meets the travel and expense (T&E) requirements of global enterprises with complex travel programmes and elevates the impact to a global business through the enablement of travel analytics, travel companion apps and integrated card programmes.


Sustainable Fitch launches transition assessment tool

Sustainable Fitch has launched its Transition Assessment analytical product. The company has developed a methodology aimed at positioning, differentiating and benchmarking companies, specifically in the energy sector, as they progressively transition from carbon-intensive to net zero. This builds on the inaugural work of the Sustainable Markets Initiative’s Energy Transition Task Force and its Framework for transitioning companies report, launched at COP27.

The new solution offers a method to better understand companies on their paths – and recognise ‘‘transition’’ as a critical enabler to achieving the aims of the Paris Agreement. The methodology will be used to identify companies evolving in high-emitting sectors and assess their transition towards net zero by assigning a colour-coded rating. The assessment features four transition colour bands, identified as Brown, Light Brown, Olive and Light Green (and their related qualifiers “-”, “=”, “+”), in addition to the outer bandings of Black and Green.

Sustainable Fitch will assess each company’s transition pathway via a series of performance indicators spanning emissions ambition, emissions reduction and financial efforts to achieve the desired transition. The numerical output derived from the performance indicators will then undergo a series of potential adjustments (that could be positive or negative) and safeguards to ensure specific condition precedents are met for each of the rating bands. 


DBS Hong Kong and CLP Power expand partnership to support SMEs’ low-carbon transition

Environmental, social, and corporate governance (ESG) is increasingly vital for businesses. According to a survey commissioned by DBS Hong Kong, 70% of SMEs in Hong Kong see ESG as an essential part of their business strategy. To support Hong Kong SMEs in their drive towards a low-carbon economy, DBS Hong Kong and CLP Power have announced the launch of the SME Low-carbon Rewards programme.

The programme will offer CLP Renewable Energy Certificates (RECs), with CLP Power’s business customers entitled to DBS Hong Kong’s subsidies to purchase CLP. CLP Power’s business customers can also receive an HKD current or savings account deposit rate of up to 1.25% per annum for settling operational expenses, including a CLP electricity bill.

In addition, CLP Power’s business customers who newly open DBS Business Accounts can receive business account opening fee waivers and a series of “$0 fee” offers, including but not limited to waivers in telegraphic transfers, local transfers and FPS payments.

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