Tax policies are constantly evolving, will these affect your business?

Grant Thornton’s teams can work with you to help you understand these regulations, develop a strategy tailored to your business’ individual tax needs and manage tax risk around the globe.

Base erosion and profit shifting (BEPS)

Businesses with a footprint in a number of countries will be aware of the variations in tax policies between regions.

In recent years, these tax discrepancies have been at the centre of a public outcry and received huge amounts of media attention. Through aggressive tax planning, some organisations capitalised on these discrepancies and regional variations to avoid corporate tax or reduce their liability. This practice is known as base erosion and profit shifting (BEPS). Although legal in the vast majority of cases, this practice has raised ethical concerns worldwide.

The Organisation for Economic Co-operation and Development (OECD) launched a 15-step action plan to tackle and reduce BEPS, which could lead to major changes in international tax standards.

Action 1: Address the tax challenges of the digital economy
Action 2: Neutralise the effects of hybrid mismatch arrangements
Action 3: Strengthen controlled foreign corporation (CFC) rules
Action 4: Limit base erosion via interest deductions and other financial payments
Action 5: Counter harmful tax practices more effectively, taking into account transparency and substance

Action 6: Prevent treaty abuse
Action 7: Prevent the artificial avoidance of permanent establishment (PE) status
Action 8: Assure that transfer pricing outcomes are in line with value creation/intangibles
Action 9: Assure that transfer pricing outcomes are in line with value creation/risks and capital
Action 10: Assure that transfer pricing outcomes are in line with value creation/other high-risk transactions

Action 11: Establish methodologies to collect and analyse data on BEPS and the actions to address it
Action 12: Require taxpayers to disclose their aggressive tax planning arrangements
Action 13: Re-examine transfer pricing documentation
Action 14: Make dispute resolution mechanisms more effective
Action 15: Develop a multilateral instrument

View a copy of the detailed action plan from the OECD

If you do business across borders, it’s essential you understand these possible changes to tax systems. Having a firm grasp on the OECD’s plans could protect you from reputational damage and also make sure your business is compliant with necessary rules and regulations.

Helping to shape future regulation

Grant Thornton International Ltd, with input from its member firms and their clients, welcomes the opportunity to comment on the discussion drafts issued by the OECD and the European Commission on future tax legislation. The detailed responses to key areas are available below:

Additional Guidance on the Attribution of Profits to Permanent Establishments [ 5363 kb ] (PDF) (5MB) Sept 2016 Action 7
Common Consolidated Corporate Tax Base [ 5274 kb ] (PDF) (5MB) Dec 2015  
Prevent treaty abuse [ 5248 kb ] (PDF) (5MB) June 2015 Action 6
Hard to value intangibles [ 5267 kb ] (PDF) (5MB) June 2015 Action 8
Preventing the artificial avoidance of PE status [ 5252 kb ] (PDF) (5MB) June 2015 Action 7
Revisions to Chapter VIII of the Transfer Pricing Guidelines on Cost Contribution Arrangements (CCAs) [ 5252 kb ] (PDF) (5MB) May 2015 Action 8
Strengthening CFC rules [ 5333 kb ] (PDF) (5MB)

April 2015

 Actoin 3
Draft on the use of profit splits in the context of global value chains [ 5326 kb ] (PDF) (5MB) February 2015  Action 10
Interest deductions and other financial payments [ 5339 kb ] (PDF) (5MB) February 2015  Action 4
Transfer pricing aspects of cross-border commodity transactions [ 5251 kb ] (PDF) (5MB) February 2015  Action 10
Revisions to 'Chapter 1' of the transfer pricing guidelines [ 5278 kb ] (PDF) (5MB) February 2015  Action 8.9 and 10
Follow-up work on preventing treaty abuse [ 5338 kb ] (PDF) (5MB) January 2015 Action 6
Preventing the Artificial Avoidance of PE Status [ 5342 kb ] (PDF) (5MB) January 2015 Action 7
Proposed modifications to Chapter VII [ 5231 kb ] of the transfer pricing guidelines relating to low value-adding intra-group services (PDF) (5MB) January 2015 Action 10
Make dispute resolution mechanisms more effective [ 5274 kb ] (PDF) (5MB)

January 2015

 Action 14
Transfer pricing documentation and country by country reporting [ 5274 kb ] (PDF) (5MB) February 2014 Action 13

If you have any questions or would like to find out more about how we can help, check your local Grant Thornton member firm’s website and contact details.