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OECD's 'Base Erosion & Profit Shifting' Project (Multi…
OECD's 'Base Erosion & Profit Shifting' Project
PwC, 2015
Multi-step plan sponsored by G20 governments
Reshape international tax rules
OECD's goal
Coordinated international tax rules that facilitate global trade
Problem: lack of consistency between countries
G20 = 84% of total world economy
Finalised October 2015
Organisations most affected
Multinationals
Increased tax burden around world
'Threat' to multinationals
Strategic decision-making
PEST analysis
Data transparency
Country-by-country reporting
Financial & tax data visible to many
Substantial compliance burden
15 focus areas, 5 basic groups
Address following
Transparency
Digital economy
Substance
Coherence
Multilateral treaty
GOAL
#
Global coordination
What it means for organisations
BEPS FOCUS
Tax incentives
Limit or eliminate tax regimes that harm other countries tax bases
Transaction Flows
Intercompany transactions
Sales, loans & licences
Rule modification
On value & arrangements
'Hybrid' transactions subject to restrictive treatment
Supply chain
Allocate profit to locations where you have SUBSTANCE
ie, tangible assets & labour
wef 2016, multinationals with global revenue > USD 849 million
New tax reporting requirements
Data for tax authorities risk assessment tool
3-level annual reporting
Country-by-country reporting
Master file
Overall global picture
Local file
Country-specific
Key concerns
Likelihood of multiple tax disputes
Security breach re data
Risk of double taxation
Uncertainty & complexity
Higher tax burden & compliance requirements
Proposed specific rule changes
Transfer pricing
Hybrid tax arrangements
Tax treaties
Deductability of inter-company payments, ie, interest