Latest Developments in Base Erosion and Profit Shifting

The international tax world is exploding with new developments. Multinational enterprises (MNE) and governments are bracing themselves for changes as the OECD spearheads the Base Erosion and Profit Shifting (BEPS) project to close gaps in international taxation, including a seismic shift in transfer pricing documentation.

As this transformation occurs, Thomson Reuters can assist you with technology, research tools, and global expertise to solve multinational tax compliance challenges.

What is BEPS?
  • Base Erosion and Profit Shifting (BEPS) seeks to close gaps in international taxation for companies that allegedly avoid taxation or reduce tax burden in their home country by engaging in tax inversions (moving operations) or by migrating intangibles to lower tax jurisdictions. It encompasses 15 Action Items that cover the digital economy, treaty abuse, transfer pricing documentation, and more. A significant shift in the overall dynamics of transfer pricing planning and compliance is imminent.

  • BEPS Action Item 13 aims to transform transfer pricing documentation – forcing multinational corporations to reconsider how transfer pricing details are reported to local tax authorities as well as worldwide with country-by-country reporting.
Why should my organization be concerned about these changes?
  • BEPS will result in a fundamental transformation of the global tax regulatory landscape. As this transformation occurs, consequences for non-compliance will become more costly, onerous, time consuming, and may result in media scrutiny. As robust and consistent tax documentation becomes a requirement, you will want to ensure your organization optimizes its current processes to minimize risk and maintain your reputation.
What are the benefits of leveraging transfer pricing technology in a post-BEPS world?

Transfer pricing documentation is already no easy feat. As the BEPS Action Plan is finalized, strenuous and evolving requirements will necessitate transparency to underlying data and a consistent policy of value creation. With information sourced from various functional groups and locations, technology serves as a central repository for data collection, consolidation, and consistent reporting. Leveraging technology enables you to dedicate time to transfer pricing planning, value chain transformation, and more to address demanding tax authorities in the new, transparent transfer pricing environment.

Preparing for BEPS

What does BEPS full disclosure really mean? For a three minute overview of BEPS, preparation recommendations and resources available to ease the burden on your tax department, view our video.

Why should you act now in preparing a BEPS strategy?
  • Upon implementation of BEPS, changes to the international tax reporting landscape will cause onerous compliance efforts. Setting up the right tools to meet BEPS compliance will take time, planning, and resources that cannot be implemented overnight.

    The best defense is to perform adequate research, build a strategy, and upgrade technology systems now so your organization is prepared to manage new regulations when they are final. Acting early can help alleviate increased pressures and risks on tax departments and finance operations, as MNEs will need to deliver transparent BEPS reporting to required authorities with efficiency, accuracy, and reduced risk of audit.