Few Companies Planning For BEPS
In general, governments are continuing to move quickly in the area of taxation in the era of BEPS. Yet, a survey conducted by financial advisory firm Grant Thornton earlier this year found that the OECD BEPS project has had little impact on the way companies plan their tax affairs. As many as 78 percent of businesses have not changed their business’s approach to taxation, the survey, published in September, found, despite more than 80 countries having agreed to adopt at least the minimum elements of the BEPS Action Plan at that point.
Why should this be the case, when companies around the world are experiencing an unprecedented level of change and uncertainty? Well, the key word it seems is uncertainty. When you are uncertain of the right way to go to get to your preferred destination, and someone keeps redrawing the map at almost every step, it is probably better to stay put, rather than get yourself completely lost. Better still, why not follow in the footsteps of those before you that have worked out the path of least resistance. As Francesca Lagerberg, Global Leader of Tax Services at Grant Thornton International, concluded, “a number of companies will be reluctant to be the first mover in this area and may be looking to see what others are doing in their industry or region. Governments have not yet explained how or even if they will implement BEPS in some countries, so that leads to business caution.”
However, multiple other surveys also confirm that even if taxpayers are playing it safe, tax audits are on the increase, and companies are under scrutiny from tax authorities in so many different ways, including, we learned recently, with respect to the mobility of their work forces. It seems that in the current environment, the tax man is determined to leave no stone unturned, and as far as taxpayers are concerned, it could be a case of damned if you do, damned if you don’t. But until the BEPS project tails off, and we have something resembling a permanent, coherent international tax structure, companies aren’t going to have much choice but to ride out these turbulent times. How long this will take is anyone’s guess.
For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look