The OECD’s Base Erosion and Profit Shifting (“BEPS”) project represents a fundamental change to the corporate tax landscape. It is tempting to assume that its impact will be limited to the tax department but the reality is that the changes are extensive and will have a broader influence, their effect felt widely – whether by treasury, finance or HR; through the impact on the group’s operating model, investment profile and M&A strategy; or on the group’s public profile.
In October 2015, the OECD delivered its final package of reports, which set out the conclusions and recommendations of each action item. The BEPS recommendations are wide ranging, covering financing, operating models, compliance and reporting.
The publication of the reports also marked a crucial shift from the consultation and recommendation phase of BEPS to legislation and implementation of the proposals by local countries. Many countries have already adopted or are poised to adopt changes to their international tax systems based on the OECD recommendations.
The impact of BEPS
The OECD’s BEPS initiative presents significant implications for tax compliance and reporting functions, transfer pricing policies and oversight, tax audits and dispute resolution, and the reputation of corporate groups. There is also much interest in the specific recommendations relating to financing and operational functions.
The impact of BEPS is not confined to the tax department. As we move further into the implementation phase, the broader effect on the business will become apparent in the cost of financing, on the supply chain and on the increase in publically available information on the activities of multinational groups amongst other things.
We examine the implications of BEPS on the following areas of your business:
A summary of the key points can be downloaded in our docment “BEPS: 25 Reasons it’s not just about tax”
In the first of a series of three articles for Economia detailing why BEPS is not just a tax matter, Tim Sarson, tax partner at KPMG in the UK, considers the impact of BEPS on multinational operating models, setting out some very real impacts that are already starting to show.