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#BEPS: Big Change In Global Taxation

Published on Mon, Oct 05,2015 | 23:13, Updated at Mon, Oct 05 at 23:13Source : Moneycontrol.com |   Watch Video :

October 5th marks a red letter day for global taxation. The OECD has released its final BEPS report. The report covers the issue of Base Erosion and Profit Shifting – an issue that has reduced the tax revenue of many countries. This BEPS report will have a far-reaching impact on tax policies of countries and hence taxation of corporations. CNBC TV18’s Menaka Doshi has the highlights

The BEPS or Base Erosion & Profit Shifting project is an attempt to curb tax avoidance. Here’s one example of profit shifting! MNC affiliates report higher taxes in lower tax jurisidctions – almost double of the taxes they report in higher tax jurisdictions. Here’s another – the effective tax rates paid by MNCs are estimated to be 4-8% less than the tax rate paid by comparable companies with domestic-only operations. OECD estimates that the revenue losses from BEPS are between $100 to 240 billion annually. That’s 4-10% of global corporate income tax revenues.

Hence in 2013 OECD initiated the BEPS project by outlining 15 action points and today it has released comprehensive reports that provide guidance and new standards on these 15 action points. They cover a range of issues…

-Addressing the Tax Challenges of the Digital Economy
-Neutralising the Effects of Hybrid Mismatch Arrangements
-Designing Effective Controlled Foreign Company Rules
-Limiting Base Erosion Involving Interest Deductions etc
-Preventing the Granting of Treaty Benefits in Inappropriate Circumstances
-Preventing the Artificial Avoidance of Permanent Establishment
-Aligning Transfer Pricing Outcomes with Value Creation
-Mandatory Disclosure Rules
-Transfer Pricing Documentation and Country-by-Country Reporting
-Developing a Multilateral Instrument to Modify Bilateral Tax Treaties

In this video Menaka talks to Sanjay Tolia, Partner, PWC to understand the impact on Indian companies…
 
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