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Financing and treasury: Tax and legal matters

Addressing the impact of COVID-19

Explore the actions and considerations that may be in focus for tax, treasury and legal teams as businesses navigate financial planning and business recovery in the current environment.

COVID-19 tax and legal department considerations for global treasury teams

As the global response to COVID-19 has sent shockwaves through the economy, business leaders are seeking to rapidly assess the level of disruption. In this current timeframe, it is essential to review and identify business, tax, and legal priorities that can safeguard your organisation.

Given the importance of cash flow to the business, treasury teams are quickly evaluating cash management, financing and risk management to help manage corporate cash positions as a result of the disruption caused by the pandemic. While business-critical areas will rightly demand the most focus, tax considerations and legal implementation can have a significant impact on the outcomes of actions that treasury teams take. To help you act decisively in this current business climate, our team of tax, treasury, and legal specialists have outlined some key considerations and practical steps to think about in the immediate future.

Actionable steps you can take today

  • Tax and treasury should connect to understand the tax and financial accounting impact of short-term and medium-term planning for repatriation, borrowing, and cash, liquidity, and risk management during this time.
  • Tax, treasury, and legal should coordinate on implementing any new financial and derivative transactions because certain tax documentation, legal documentation, elections, and claims may need to be made upon the execution of such transactions (e.g. hedging transactions).
  • Tax, treasury, and legal should coordinate to address tax implications of any modifications to existing debt instruments or similar agreements ideally prior to making such modifications, and once a decision to modify has been made, make the required amendments to the legal documents.
  • Tax and transfer pricing analysis should be performed related to existing financial instruments, even if modifications are not contemplated.
  • Overall, tax should consider reviewing expected profit and loss profiles across jurisdictions, assessing the implications in each for, e.g., loss utilisation and interest deductibility, and assessing actions that can be taken to remove inefficiencies.

Managing your COVID-19 tax and legal response with clarity, confidence and insight

Deloitte’s global tax and legal professionals will work with you to help you manage the disruption to the business and identify immediate business, tax, and legal priorities. During this volatile time, having a framework for reviewing the current financing and treasury strategy is critical. Deloitte believes that this framework allows companies to balance long-term planning with short-term demands for survival and future growth with resilience.

For more information on the impacts of COVID-19 and important considerations for your financing and treasury department, please contact the specialists below.

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