Chief financial officers (CFOs) of multinational corporations (MNCs) are fairly evenly divided on whether the base erosion and profit sharing (BEPS) project will create a more sustainable global tax system, according to the latest annual global survey by Taxand.
The tax advisory firm found that 52% of survey respondents agree that BEPS – an initiative of the Organisation for Economic Co-operation and Development (OECD) – will improve the tax system while 48% disagree.
Following the release of the OECD’s first seven action plan responses at the end of 2014, the BEPS initiative continues to make headway with public consultation on discussion drafts continuing.
MNCs are already witnessing the impact of BEPS, reports Taxand, as governments and authorities drive an aggressive approach to stamping out tax avoidance loopholes and expose the tax affairs of corporates through greater transparency and across the media.
Whilst the OECD aims to achieve more sustainable global tax landscape, the lack of clarity on key issues will mean further confusion for MNCs on how operationally they should implement BEPS. The survey found that while 80% regard tax initiatives to fundamentally reform international tax architecture are desirable, just 55% think it is achievable.
The global initiative will require close international co-operation, transparency, data and reporting requirements from all countries and MNCs. Survey respondents felt that it will have a material financial and operational impact, with 83% globally believing that enhancing global tax transparency will increase the cost of compliance.
Despite the increase in administrative burden; lack of clarity on who will have access to information and the potential for misinterpretation of the data supplied, 57% of global respondents were in favour of the BEPS proposal of reporting country-by-country profits. However, there is a downside, with 83% believing tax competition will increase over next five years and 76% believing BEPS will make countries more competitive from a corporate tax rate perspective.
Questions remain around the timeline for implementation of the initiative, as well as who holds the authority to implement the action plan. 52% of survey respondents believe that national tax authorities should be given responsibility to enforce BEPS at country level, whereas 38% thought the OECD would a better option.
“The OECD’s BEPS action plan is designed to revolutionise the taxation of companies across the globe,” said Frederic Donnedieu, chairman of Taxand. “It is the most coordinated attempt to redefine the system to reach common objectives – in both developed and developing economies – that we have seen in some time.
“While many of the action points are still being ironed out for detail, once finalised, countries need to quickly create a stable tax environment that multinationals can have confidence in, by bringing these rules into law swiftly and instructing tax authorities to commit to enforcing the regulations. Multinationals are facing a new frontier where the landscape is uncertain.”
Next April’s deregulation of the water industry could benefit commercial customers in England if they plan ahead, it is claimed.
An extensive letter submitted to US Secretary of the Treasury Jack Lew by Treasury Strategies spells out a list of concerns over the proposed regulation.
An estimated US$1.3 trillion credit gap has opened up in the global foreign exchange market due to stricter regulation, less appetite for risk and the falling number of prime brokers
In episode two of the FinTalk podcast we talk to long time business partners and co-founders Michael Kent and Ricky Knox about building the next generation of banking and financial services.