BEPS

Background

A combination of increased media attention on tax avoidance and the need to shore up Governmental tax receipts in difficult economic conditions has led to the tax arrangements of multi-nationals being put in the spotlight. The press and the activities of NGOs and charities have, in particular, raised the issue of tax avoidance in the public consciousness and the political arena.

Much of the debate, often addressing very complex issues, has been conducted in an unfortunately simplistic manner, eliding the difference between avoidance and evasion and painting legitimate, long-standing arrangements as aggressive avoidance, for example. However, in the furore over tax avoidance, one area in relation to which all could find common ground was the need to modernise the international tax rules.

Many of the rules which determine the tax treatment of cross-border situations pre-date the current digital economy. For example, it is now possible for businesses to sell goods and services into economies with no physical presence in a way that could not be conceived when the rules dealing with permanent establishments were first formulated. As a result, it can be difficult to apply these rules to the modern business context.

BEPS

As a result of the growing pressure in the tax avoidance debate and at the request of the Governments of the G20, the OECD produced a report into base erosion and profit shifting (BEPS) in February 2013. This report received strong support from the G20 leaders and accordingly was followed in July 2013 by the OECD Action Plan, which set out 15 specific actions to be taken forward by the OECD.

In September 2015, the OECD published its final reports on these action points. They cover a wide-range of international tax issues, including: taxation of the digital economy; use of hybrid instruments and entities; modernising transfer pricing rules, especially with regard to intangibles; double tax treaty abuse; permanent establishment rules; CFC rules; base erosion via interest deduction; and country-by-country reporting.

Following the publication of the final reports, the focus now moves to the issue of implementation of the various agreed actions in the participating jurisdictions.

What's new

ATAD II: hybrid mismatches with third countries

AG opines on scope of anti-Directive shopping rules

Treaty relief and non-CIV funds discussion draft

OECD updates BEPS report on interest deductions

The Multilateral Convention to implement BEPS Tax Treaty Measures

UK consultation on interest restrictions: Simmons & Simmons response

BEPS and interest restrictions: banks and insurance companies

Draft Anti Tax Avoidance Directive approved

Further consultation on UK interest restrictions

OECD BEPS consultation on treaty entitlement of funds

EU Commission publishes anti-tax avoidance package

MPs to investigate UK tax system following Google tax deal

CbC Competent Authority Agreement signed

The OECD’s BEPS Action Plan

Encyclopaedia of BEPS: the effects on the funds market

UK consults on BEPS recommendations for interest restrictions

UK consults on CbC reporting

OECD releases final BEPS reports

BEPS Action 13: Country-by-Country Reporting Implementation Package

Preventing the artificial avoidance of PE status

OECD's discussion document on CFC rules

BEPS: What does it mean for funds and asset managers?

OECD progress towards implementing BEPS

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