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The Challenges of Matrix Organisations
The tax challenges of having a matrix organisation are a perfect example of the different viewpoints existing between multinational enterprises (MNEs) and tax authorities: Business is global, but taxation is still a local country matter. This is not only a perspective mismatch but also a speed difference: Business drives, tax follows. The way how MNEs do business has changed significantly and is constantly evolving in the current age of digitalisation.
This article outlines, from a high-level perspective, the principal tax risk areas to ponder before implementing a new role in an organisation, bearing in mind that there is no “one-size solution” that can fit all cases. It provides an overview of the key characteristics of a global matrix organisation, as well as the main risk areas, based on practical experience.
1. Introduction
In the old world, an MNE was the sum of individual legal entities located in various countries, with a local CEO, local CFO, and local reporting lines. The local management reported to global or regional management and the reporting lines, as well as the decision-making competences, followed geographical and legal personnel assignments.
In today’s world, an MNE...