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BEPS: The endgame

The boldest initiative in transfer pricing history entered the homestretch in October 2015 with the release of the OECD's final report on its base erosion and profit shifting (BEPS) project. The reverberations are being felt across North America, Europe, Asia and beyond.

Multinational enterprises will soon need to provide tax authorities with details of almost every facet of their business through the master file, local file and country-by-country reports: key profit drivers, global value chains, transfer pricing policies for major services and intangibles, MNE financial statements, and more. Is there any doubt about who has the upper hand: taxpayers or tax authorities?

The objective of the OECD's plan is clear: combat aggressive profit-shifting strategies. BEPS was designed to ensure MNEs reveal profits in jurisdictions based on assets, risks and actual functions. It is unsurprising then, that BEPS is shaking up countries and companies.

While tax officials and legislators worldwide are moving quickly, many companies are moving cautiously. Some are concerned about how authorities will handle tax data. Others worry about confidentiality breaches or the risk of audits and double taxation But a sense of urgency is needed, otherwise, MNEs risk penalties, reputational risks and additional taxes.

In his candid assessment of the tension between taxpayers and tax authorities, Tae Hyung Kim, a partner at Deloitte Korea, explains what multinationals must consider and what they should fear.

Hendrik Blankenstein and Caterina Colling Russo of Tax Partner AG – Taxand Switzerland examine whether the newly introduced DEMPE analysis benefits MNEs and tax authorities, or whether it will just confuse matters and result in an increase of intangibles-related transfer pricing disputes.

Dale Hill, a partner at Gowling WLG in Canada, considers the application of BEPS guidelines to the transfer pricing aspects of intangibles and the impact on tax-motivated IP migration strategies. His insightful analysis encompasses both pre- and post-BEPS strategies.

Finally, questions remain about how much change the US is prepared to implement, but the OECD's recommendations are without doubt having an impact. David Forst and Larissa Neumann of Fenwick & West discuss US developments including the IRS and Treasury Department-issued 482 temporary regulations.

Caroline Byrne

Managing editor, TPWeek.com

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A steady stream of countries has announced steps towards implementing pillar two, but Korea has got there first. Ralph Cunningham finds out what tax executives should do next.
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Former PwC partner Peter-John Collins has been banned from serving as a tax agent in Australia, while Brazil reports its best-ever year of tax collection on record.
Industry groups are concerned about the shift away from the ALP towards formulary apportionment as part of a common consolidated corporate tax base across the EU.
The former tax official in Italy will take up her post in April.
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Lawmakers seem more reticent than ever to make ambitious tax proposals since the disastrous ‘mini-budget’ last September, but the country needs serious change.
The panel, the only one dedicated to tax at the World Economic Forum, comprised government ministers and other officials.
Colombian Finance Minister José Antonio Ocampo announced preparations for a Latin American tax summit, while the potentially ‘dangerous’ Inflation Reduction Act has come under fire.
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