BEPS

The OECD has finally released its long-expected set of reports regarding its Base Erosion and Profit Shifting (BEPS) project.

Reducing the number of action points from 15 to 13, the OECD presented recommendations and common responses to align international tax rules and tackle base erosion and profit shifting. All recommendations offer governments a series of measures that can be introduced through domestic law changes, and were discussed in more detail at the summit of G20 countries in Lima, Peru.

EU economic and finance ministers reached a unanimous agreement on the automatic exchange of information on cross-border tax, an important aspect of the BEPS project, on 6 October so moves are already underway towards what compliance will look like.

The final reports remain centred on three issues:

  • establishing international coherence of corporate income taxation
  • restoring the full effects and benefits of international standards
  • ensuring tax transparency while promoting increased certainty and predictability.  

In many countries the emphasis will now be on introducing rules to implement country-by-country reporting mechanisms, introducing stricter CFC rules, working to prevent hybrid mismatches, improving anti-abuse rules for treaty application, and sharing tax rulings. Other aspects of the BEPS project are not fully endorsed by various governments yet and will be further discussed.

BEPS will have an impact on many cross-border trades and industries. It is key that your business understands the potential issues of the BEPS project, the fundamental changes it introduces and is able to take appropriate action. Talk to your TMF Group contact about how you obtain the best insight of all changes and how we can help your organisation prepare for the requirements set out in the BEPS Action Deliverables.

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