Tax planning is increasingly seen as a potential risk to the reputations of multinational companies (MNCs), according to the latest survey of CFOs conducted by Taxand.

Nearly nine out of ten (87%) European-based multinationals are concerned that their company's reputation could be affected by tax planning exposure, up 19% on last year's survey.

The threat of negative publicity surrounding tax payments, added to the growing criticism of directors' remuneration packages and compensation tax, has pushed the issue to the forefront.

While companies are concerned about the downside of bad publicity due to excessive tax planning, almost half (44%) of MNCs said their expansion plans have been curbed by over-zealous tax authorities and this is coupled with an incerasingly aggressive stance from tax authorities, who are conducting more tax audits to assess compliance with local tax laws.

At the same time, 88% said that rising tax transparency and reporting measures have increased the cost of compliance.

The complex European tax system is also seen as a deterrent to growth and nearly two-thirds of companies think global tax harmonisation is desirable, with 71% believing it is achievable in the next five to 10 years.

Tax dispute resolution remains the biggest issue for multinationals in Europe, although this has dropped from 18% in 2011 to 14%.

Frédéric Donnedieu de Vabres, chairman of Taxand, said: 'There have been many examples in Europe of corporates being named and shamed for their planning approaches.

'There remains a significant amount of confusion around tax planning; the public and media don't always view legitimate tax structures that way. The importance of demonstrating substance has risen to the fore and companies must also be aware of retrospective legislation. Companies need to be seen as good corporate citizens, or potentially face reputational damage.'