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BIAC continues to support the G20 mandated Base Erosion and Profit Shifting (BEPS) project, and has always sought to provide constructive and detailed input from the international business community across the full spectrum of OECD’s Action Items.
As the project enters its final phase, BIAC is releasing its BEPS Position Paper detailing specific concerns of the business community over the full range of BEPS Actions. The BEPS Position Paper aims to more closely focus the scope of the recommendations, with the aim of achieving a pragmatic, flexible and incremental approach to tax policy development. BIAC believes this will help tackle the important issues of base erosion and profit shifting that have concerned governments and their electorates, while at the same time protecting, and indeed encouraging where possible, the cross-border trade and investment that leads to critically needed growth and jobs.
This Position Paper represents the consensus feedback BIAC has received from its members, covering general comments in relation to the entire BEPS project, as well as comments on specific Action Items. The paper will be updated to reflect developments in the months ahead.
General BIAC comments on BEPS
Scoping: According to BIAC, it would still be helpful to more narrowly target the scope of each Action to increase the chance of developing the necessary inter-governmental consensus. At present, many proposals appear to go beyond the scope required to effectively target BEPS related activities. BIAC strongly believes that “success” in the BEPS project would be achieved with a set of detailed, well-defined proposals that can be (and are) implemented consistently.
Economic impact: There is great concern that the economic consequences of the proposals have not yet been fully considered, and that recommendations may be adopted without a proper impact assessments. Although uncertainty, double-taxation, disputes and compliance burdens are a focus of business, we are also concerned about the broader economic impact that may not have been considered so far. These might include, for example, the impact on the efficiency of markets, or the sustainability of certain legitimate non-tax driven commercial transactions (for example, cross-border infrastructure projects). BIAC believes that the justified targeting of BEPS activities must be integrated with larger economic concerns related to creating jobs and growth through cross-border trade and investment.
Clear guidance: In a number of areas, the BEPS Action Plan proposes substantially new and complex rules to tackle avoidance. Given the pressures of the ambitious timeframe, there have been very few opportunities to explore how these complex proposals can be adopted and implemented on an international basis. Both tax authorities and businesses will need detailed implementing guidance to ensure that the intention of each Action Item is clear.
Interaction of the Action Items: Although the project is approaching its conclusion, there is no clear strategy to identify how the different Action Items interact with each other or how the proposals will be brought together. Despite that the OECD is aware of the issue, BIAC is concerned that certain BEPS issues will be targeted by multiple Action Items. In this regard BIAC believes that, it is crucial to consider these interactions before widespread implementation.