BEPS STILL TAKING SHAPE UNDER THE AUSPICES OF THE INCLUSIVE FRAMEWORK - PWC AUSTRALIA
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Tax Policy Bulletin
BEPS still taking shape under the
auspices of the Inclusive Framework
11 May 2017
In brief
The Inclusive Framework of nearly 100 countries is now responsible for the direction of the base erosion
and profits shifting (BEPS) initiative. The BEPS Project was started by the G20 group of countries,
initially coordinated by the full members of the Organisation for Economic Cooperation and
Development (OECD) and is currently led by the wider group which includes BEPS associates. A vital
part of the project is consistent and timely implementation, particularly bearing in mind some domestic
policy trends. Additional work also is underway to clarify and enhance the standards identified for
change. This paper seeks to update you on progress in both areas given their significant impact on
corporate tax planning and compliance.
To join the Framework, countries had to commit to implementing the minimum standards agreed in the
October 2015 BEPS reports, i.e. in 4 of the 15 action areas. Those countries are also responsible for
monitoring implementation of other recommendations in those reports as well as completing additional
BEPS work.
The number of people that must agree, as well as the more varied economic and political systems
involved, means that further consensus among the Framework countries will be harder to achieve.
However, proposals are still being presented for discussion. Tax policy developments in particular
countries like the United States, India and China, or regions like the European Union (EU), the
Association of Southeast Asian Nations (ASEAN) and the Gulf Cooperation Council (GCC) will also have
a role.
The Platform for Collaboration on Taxation brings together the OECD, the United Nations (UN), the
International Monetary Fund (IMF) and World Bank Group (WBG). They are working on tax issues
beyond the BEPS project while the Inclusive Framework remains largely coordinated by the OECD. Their
combined resources, breadth of experience and influence on tax matters is a powerful lobby for change,
both in terms of what has been agreed and what is still to come. Although not primarily involved in BEPS
and instead currently focusing on toolkits for developing countries, the Platform’s work will impact the
Framework countries on BEPS and influence the ‘fit’ of the BEPS outcomes with wider tax issues,
particularly related to the drive for inclusive global growth and the role of other factors like tax certainty.
www.pwc.comTax Policy Bulletin
In detail frame and making a financial Taxation early in 2016 has resulted in
contribution. Ninety-six countries (as the publication of a number of toolkits
The players and the ‘props’ of press time) are now participating as for lower income countries; while
Recommendations in the October part of this Inclusive Framework in some of these papers are linked with
2015 Reports addressed 15 action further BEPS standard setting, BEPS they are not included in this
areas which had been the BEPS clarifying the 2015 recommendations, update. However, the Platform’s work
project’s focus. The BEPS participant providing guidance and monitoring may have some influence on the
countries agreed, by consensus, implementation. outcomes of the BEPS Project.
minimum standards related to:
Many of these nearly 100 countries PwC comment: Implementation of
preferential regimes, including participated throughout 2016 in the BEPS measures has focused primarily
exchange of tax rulings (Action 5) development of a multilateral on the minimum standards. There has
treaty abuse - in particular the instrument (MLI), which signatory been progress, particularly related to
principal purpose test (PPT), countries could use to modify the CbCR and the mechanism for
detailed limitation on benefits effect of existing double tax treaties on exchanging this and other
(LOB) clause or a PPT and BEPS. The impact of the finished MLI information, including tax rulings.
simplified LOB (Action 6) will depend on the matching of The treaty abuse and MAP standards
country-by-country reporting broadly similar options chosen by the will be delivered through broad take-
(CbCR) to tax authorities (allied to parties to any existing treaty. This up via the MLI as well as in new
wider transfer pricing process is now underway. bilateral treaties. Other standards are
documentation in Action 13), and less certain, with inconsistencies
improved mutual agreement The tax policies adopted by individual expected to arise in a number of areas.
procedures (MAP) for resolving countries, not just on the MLI issues Delays also seem likely due to
disputes (Action 14). but on other BEPS matters and more inherent uncertainties in the
generally as well, are the subject of introduction of new and different
In addition, changes were agreed (and significant focus. This includes, but is policies in particular countries and
further workstreams scheduled to not limited to: regions.
finalise these changes) to the existing
OECD Model Treaty and Transfer the impact of the new US BEPS standards agreed since
Pricing Guidelines. Finally, some administration October 2015
actions resulted in ‘best practice’ the direction of EU competition
approaches to particular issues (e.g. laws (including State Aid Interest deductibility
CFC rules). investigations) and Brexit issues
The OECD released in December 2016
India’s adoption of VAT and a
an updated version of the BEPS
The OECD had initiated and GAAR
Action 4 Report (Limiting Base
coordinated the BEPS project at the China’s views on transfer pricing
Erosion Involving Interest
G20’s behest. The countries involved and local market factors
Deductions and Other Financial
from the outset in 2013 through the introduction of VAT across the
Payments). This is not a minimum
October 2015 were the G20 states plus GCC, and
standard but a recommended
other OECD member states with a the six tax elements of the
approach. It includes further guidance
handful of other invited participants. Strategic Action Plans for ASEAN
on two areas:
These included some specific financial integration 2025.
territories and the European the design and operation of the
Commission (on behalf of the The development of international tax
group ratio rule, and
European Union, itself a G20 policy more generally is now being
approaches to deal with risks
member), reflecting broader economic influenced by an agreement between
posed by the banking and
characteristics. the OECD, UN, IMF and WBG to
insurance sectors.
collaborate on various issues. These
Other countries were invited to join in do not include most of the BEPS- PwC comment: Groups will have to
as ‘full BEPS associate members’ from related matters per se. The compute a separate group ratio test
early 2016. They had to commit to cooperation that began mid-2015 and using different rules for the different
implementing the BEPS minimum was formalised in the form of the territories which implement Action 4.
standards in a relatively relaxed time Platform for Collaboration on This is a result of the tension between
2 pwcTax Policy Bulletin
getting the group interest number Zealand, Norway, Poland, Slovenia, There are different fund types, and
calculated in a way which will be Spain, Sweden, Switzerland, the while the examples may fit the case of
recognised by all territories (and United Kingdom and the United some non-CIV funds, there may in
therefore standardising and States. common cases also be differences.
simplifying compliance) and allowing Therefore, we hope that the OECD will
territories to make adjustments to suit Guidance/ clarification of confirm that not being able to match
their own domestic tax rules and standards any one particular point set out in the
policies. Inconsistency can also be Branch mismatch structures examples does not necessarily, of
expected in the banking and insurance itself, exclude a fund from passing the
sectors since territories are given a On 22 August 2016 the OECD PPT and/or otherwise accessing treaty
great deal of flexibility in applying a published, for discussion, benefits.
special regime, including exemption recommendations for domestic laws
and identifying particular risks. that would apply the analysis and
Implementation and monitoring
recommendations set out in the
Action 2 Report Neutralising the More so than other items, countries
Arbitration
Effects of Hybrid Mismatch have kept good pace in adopting the
Part of the MLI (Part VI: Articles 18- Arrangements to mismatches that can minimum standards. In addition,
26) is devoted to a new but optional arise through the use of branch some countries (and the EU) have
standard on binding arbitration as a structures. The OECD identified five made other changes to domestic
means of settling cross-border tax basic types of branch mismatch legislation. Furthermore, the MLI will
disputes. About 20 countries were arrangements and set out preliminary allow for widespread take-up of some
involved in the discussions about recommendations for domestic rules of the other treaty-based
eventually putting the measures that would neutralise the resulting recommendations in existing treaties
forward. Countries have options mismatch in tax outcomes. and encourage inclusion in new
concerning the scope of topics to be treaties. At this stage, the Inclusive
covered and the method of PwC comment: If the OECD were to Framework’s monitoring is largely
arbitration. However, the default is finally recommend these rules in a focused on the minimum standards.
the ‘last best offer’ in which the panel consensus document, they would add
will select as its decision one of the even more complexity to the already Country-by-country reporting
proposed resolutions submitted by the very long and complicated hybrid (Action 13)
competent authorities. There is a two- mismatch guidance. The United PwC has observed that more than 60
year default period for Competent Kingdom (and the EU to a lesser countries have proposed country-by-
Authorities to reach agreement once extent) have included branch country reporting (CbC reporting) to
an issue has been raised with them mismatch scenarios in their anti- tax authorities (Action 13) in their
before arbitration may apply, but hybrid legislation (and Directive, domestic reporting requirements
resolution thereafter should be fairly respectively). (though the OECD has recognised that
quick: see our Tax Policy Bulletin of 5 only 45 are operational). The requisite
December 2016. Examples for non-CIV funds
legal capacities for exchanging that
On 6 January 2017, the OECD information with other countries
In its fifth Tax Talks webcast of 28
published three draft examples to (mostly the CbC multilateral
March 2017, the OECD suggested that
illustrate the entitlement of non-CIV competent authority agreement or
25 countries may be ready to sign up
funds to treaty benefits. This followed CbC MCAA) have also been signed. In
for arbitration. This subsequently
increased to 26 countries. an earlier consultation exercise in general, these countries had the
March/ April 2016 on those rights. framework in place during 2016 so
PwC comment: In an informal There is a proposal to include the that MNE groups can file the first CbC
survey conducted among PwC examples in the Commentary on the reports with the relevant tax
member firms, countries that may OECD Model Tax Convention on the administration by 31 December 2017
sign up for arbitration that were not PPT in due course. (covering the 2016 calendar fiscal
involved in the negotiations include year).
Singapore, India and Hong Kong. The PwC comment: There might be
changes to the examples before final EU members will be required to
original 20 countries were Australia,
agreement. Also, we expect a few produce and share their CbC reports
Austria, Belgium, Canada, France,
countries to try and stipulate for periods beginning on or after 1
Germany, Ireland, Italy, Japan, January 2016 (note the secondary
Luxembourg, the Netherlands, New derogations in specific circumstances.
3 pwcTax Policy Bulletin
mechanism was deferred until periods see our Tax Policy Bulletin of 7 each covering 1 January to 31
starting on or after 1 January 2017). February 2017. December from 2016 to 2019. The
The enacted directive was published Inclusive Framework’s current
in the Official Journal on 3 June 2016 PwC comment: The largest notable mandate expires in 2020, so would
(Council Directive (EU) 2016/881). exception to these signatories to CbC need to be extended before further
reporting is the United States, which reviews are anticipated. See further
In its Implementation Guidance, the has stated that it will not sign the CbC our Tax Policy Bulletin of 7 February
OECD specifically noted that MNE MCAA. Instead it will sign individual 2017.
Groups with an ‘Ultimate Parent agreements with specific treaty
Entity’ resident in a jurisdiction whose partners. If an organisation’s home PwC comment: Clearly, a number
CbC reporting legal framework is in tax jurisdiction does not require CbC of tax regimes over and above IP
effect for Reporting Periods later than reporting, does not implement it specific ones have been identified as
1 January 2016 may choose to effectively, has suspended automatic being potentially harmful within the
voluntarily file their reports in their exchange of information (for reasons criteria tested (including sector
local territories. The OECD defined other than those in accordance with specific regimes and holding
this as ‘parent surrogate filing’. the relevant qualifying competent company/ headquarter regimes). We
Additional guidance on 6 April 2017 authority agreement), or has expect more remedial action in these
for tax administrations and MNE persistently failed to automatically areas. The large number of exchanges
Groups clarifies several interpretation provide information in its possession, that have already taken place will be
issues related to the data to include in then the CbC Report becomes a local supplemented by those from
the CbC report as well as to the filing requirement or the MNE may additional countries whose reporting
application of the model legislation: elect a surrogate parent entity to fulfil requirements ‘kick-in’ during the
their CbC reporting obligation. We second or third wave. Some of these
the definition of revenues expect more guidance on CbC may give rise to additional examples
reporting shortly.
the accounting principles/ of harmful practices to be
standards for determining the investigated.
existence of, and membership in, Harmful tax practices (Action 5)
a group There are two aspects to Treaty abuse (Action 6)
the definition of total consolidated implementing this minimum Widespread implementation of the
group revenue standard: minimum standard elements of Action
the treatment of major
6 has been expected.
shareholdings, and preferential tax regimes, and
the definition of related party. exchange of tax rulings. Inclusion of a principle purpose test
(PPT) before a taxpayer can access
This guidance has been updated The OECD has suggested that more treaty benefits is apparently the route
several times since its initial release. than 90 regimes from 46 jurisdictions most widely adopted following the
We expect it to be updated again as have been reviewed, but more may BEPS recommendations. We’ve seen
additional issues emerge. follow. These include IP/ patent box some new treaties including:
regimes although many countries have
In due course, the OECD expects already made changes to align these a PPT alone, as for example the
exchanges to start by 31 August 2018, with nexus requirements or set up treaties between Chile-Italy
i.e. within 18 months of the MNE new compliant regimes (including Article 27 (signed 23 October
Group's fiscal year-end (31 March or Belgium, China, Cyprus, Germany, 2015, in force 22 December 2016);
15 months for subsequent reporting Ireland, Israel, Italy, Liechtenstein, Chile-Japan Article 22 (signed 21
periods). Luxembourg, Netherlands, Portugal, January 2016, in force 28
Singapore, Spain, Switzerland and the December 2016); Iceland-
The OECD has sent out the first of United Kingdom). Liechtenstein Article 28 (signed
annual self-assessment questionnaires 27 June 2016, in force 14
to be followed by those requesting On the transparency framework for December 2016); and UK-
input from counterparty territories tax rulings, the OECD has reported Colombia Article 22 (signed 2
with which reports should be that there had been more than 6,000 November 2016 but not yet in
exchanged. Initially the focus will be exchanges by the end of 2016. force).
on the framework and security of
information. For more information, Annual reviews have again started in a PPT and simplified limitation of
relation to exchanges of tax rulings, benefits (LOB) provisions, as for
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example with the treaties between a third country which applies a United Kingdom and the United
Japan and Germany Article 21 low tax rate to it. States, and
(signed December 2015 and in secondly Austria, France,
force 28 October 2016), and China PwC comment: The MLI allows for Germany, Italy, Liechtenstein,
and Chile Article 26 (signed May modifying the effect of existing Luxembourg and Sweden.
2015 and in force 8 August 2016). treaties for these treaty abuse counter
measures. Our survey and most new The OECD released a schedule for
The MLI, by default, allows for a PPT treaties suggest that countries will MAP reviews to occur every four
and, optionally, to add also a adopt the preamble. Few countries are months through April 2019. However,
simplified LOB (either on a matched expected to prefer a detailed LOB. we understand that some countries
basis or asymmetrically). Countries Further, around half of those who have asked for a deferral. As a result,
may opt out of these alternatives in responded said it was likely their an updated list may be available soon.
favour of a detailed LOB, though country would not allow asymmetrical
specific wording of an LOB of this type use of the simplified LOB (none The review team received over 100
is not included in the MLI itself. positively suggested their country was responses from other countries
likely to allow it, despite the limited commenting on the MAP procedures
Also part of the minimum standard is evidence of new treaties above). There of the countries reviewed in the first
the recommendation to include is a very mixed picture on adoption of tranche. That team has apparently
preamble language confirming that the parts that are not within the been quite strict about whether
the treaty should not be used to minimum standard. countries met the standard. The
achieve non-taxation or reduced report will be finalised later in the
taxation through tax evasion or Mutual agreement procedures or year and an abridged version will be
avoidance (including through treaty- MAP (Action 14) made public.
shopping arrangements aimed at
obtaining relief provided in the treaty Virtually all countries are expected to
PwC comment: The commitment to
for the indirect benefit of third State implement the MAP minimum
improve dispute resolution
residents). standard and to apply that option in
mechanisms for cross-border disputes
the MLI.
is noticeable. This should interest
Other actions, which do not represent both the taxpayer and tax authorities.
part of the minimum standard, Part of that standard requires a
The number of outstanding MAP
include: country to publish its MAP profile cases has been rising progressively
pursuant to an agreed template. That and the number of complaints about
profile should encompass useful MAP
the competent authorities of the failing to gain access to MAP has been
information including competent growing. In practice historically it has
Contracting States endeavouring
authority details and links to domestic also proven difficult to deliver
to determine residence by mutual
MAP guidelines. The OECD has
agreement, instead of relying on improvements to MAP. For example,
provided a list of links to MAP the EU arbitration convention became
the place of effective management
profiles. severely restricted in it use. The
or similar rule
the 365 day minimum holding current initiative is strengthened by
The standard also requires the the apparent will to consider
period requirement before entities
reporting of MAP statistics from 2016 arbitration (as noted above).
can benefit from exemption or a
onwards according to a reporting
preferential dividend withholding
framework; OECD member countries
tax rate that depends on the level Other treaty provisions
and a number of non-OECD
of shareholding in the paying
economies have been providing We have seen some examples of how
entity (i.e. the direct holdings
similar data for reporting periods countries that have signed new
rate)
2006 to 2015. treaties (above) have implemented
the 365 day minimum testing
period for capital gains benefits other BEPS-related treaty issues.
Monitoring Action 14 is underway. We The most significant measure is the
on the alienation of shares or
have already seen input requests from PE status (Action 7), which to
interests of entities deriving their
the Inclusive Framework to the first reiterate is not a minimum standard
value principally from immovable
two tranches of peer review covering: as there was an insufficient level of
property, and
the triangular provision that accord.
firstly Belgium, Canada, the
would deny treaty benefits when
Netherlands, Switzerland, the We’ve seen that lack of accord
certain income is attributable to a
permanent establishment (PE) in through some of the newer treaties.
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For example, neither the Germany- wording negotiated in treaties as it regime in light of the BEPS
Japan treaty nor the Columbia-UK stands. The United Kingdom is as yet discussions, with the likes of Taiwan
treaty contain the new language on the only one we know that proposes to and Colombia following. Others, such
the agency PE clause (making it follow this third way. There are a as China, Japan and Norway, have
more likely there is a PE where an number of reasons why this should be been making changes to provide a
agent carries out contractual-like the case, including the existence of the more closely aligned regime.
discussions and limiting the extent diverted profits tax which applies
to which independent agents are among other things to ‘avoided PEs’. There has been very little solid
carved out if they work almost movement on disclosure of aggressive
exclusive for closely related entities). Wider BEPS implementation tax planning schemes (Action 12).
While the latter treaty has a PE anti- Countries have been introducing Israel announced expansion of its
fragmentation rule requiring you to measures covered by other BEPS reportable transaction regime and
consider closely-related entities action areas in a piecemeal fashion. Colombia introduced a new
together for the specific activity mandatory disclosure regime (MDR).
exemptions, the wording in both Our monitoring of other BEPS In addition, China announced its
refers to preparatory and auxiliary recommendation implementations intent in October 2015 to consider
only in relation to: suggests mixed actions. introducing an MDR but was cautious
of the additional compliance burden.
Applying the revised TP Guidelines Australia did include an MDR in
“e) the maintenance of a fixed place
does not require much change. Our consultations which closed in July
of business solely for the purpose of
intelligence suggests that countries 2016 and Sweden opened an
carrying on, for the enterprise, any
are not being entirely consistent in investigation into the possibility on 7
other activity of a preparatory or
their practical approach to the risk April 2017. The European
auxiliary character;
assessment. Many are quoting the Commission also consulted on
f) the maintenance of a fixed place
BEPS revisions but are still applying intermediaries and disincentives for
of business solely for any
diverse views. aggressive tax planning with an MDR
combination of activities mentioned
in subparagraphs a) to e), provided as one of the possible options.
A number of countries already had
that the overall activity of the fixed interest deductibility restrictions PwC comment: The adoption speed
place of business resulting from this (Action 4). They are nonetheless of the majority of non-minimum
combination is of a preparatory or adapting them while other countries standard BEPS recommendations has
auxiliary character.” are introducing restrictions for the been slow outside of the United
first time. The United Kingdom has Kingdom and EU. With the pace of
This is largely the second option been one of the forerunners in trying
within the Action 7 Report, which the change being brought about by other
to translate the recommendations into economic and political developments,
Report states reflects the fact that
active legislation. India has been one this is not entirely surprising. The 18
some countries “consider that some of
of the latest to take up the proposals March 2017 report of the recent
the activities referred to in
in its 1 February 2017 Budget. OECD/ IMF survey on tax certainty
paragraph 4 are intrinsically
preparatory or auxiliary”. Vietnam published a decree in identified frequent tax changes as the
February that is effective 1 May 2017, greatest factor in business uncertainty
PwC comment: In taking up options and New Zealand went through a affecting investment and growth.
within the MLI to apply other BEPS consultation process from mid-March
provisions to existing treaties, our to 18 April. Work still to come
survey suggested countries were A number of the papers above
The controlled foreign company (CFC)
divided in their approach to the PE constitute non-consensus documents
recommendations. The survey also best practices (Action 3) perhaps
for discussion. Further work is being
suggested that quite a few countries represented one of the weaker sets of
carried out in those cases to reach
may not adopt the agency wording. BEPS recommendations. They
final recommendations. However,
Further, the MLI allows for countries virtually allowed countries with
other areas of study also are ongoing
to reserve not to adopt either the existing CFC regimes to ‘stick’ leaving
with a view to publishing new BEPS
revised wording applying ‘preparatory only those without any CFC rules to
proposals in due course. In addition, a
or auxiliary’ to each mentioned consider whether to ‘twist’ and take on
revised consolidated version of the
activity or, the commentary notes, to additional measures. Chile was one of
OECD Model Treaty is expected to be
clarify it does not apply. The third the first players to introduce a CFC
published in 2017.
option effectively leaves the existing
6 pwcTax Policy Bulletin
Outstanding transfer pricing issues report is to be presented to the G20 additional anti-treaty shopping
ahead of the Spring 2018 WBG and rules as BEPS-related.
Four new developments involving
IMF meetings tentatively scheduled Similarly, China has taken a very
transfer pricing concepts are expected
for 12-14 October. This will not affect keen interest in areas of BEPS and
in the near future:
the timing of the final Action 1 review considered the recommendation
attribution of profit to PEs (June report being expected in 2020. in the context of its own
2017) requirements. Notably, China's
PwC comment: The OECD is busy, Bulletin 6 issued 17 March 2017
use of the profit split method
not only with BEPS but in other areas. reinforces the arm's-length
(June 2017)
This is stretching resources in some principle over draft guidance
TP and financial transactions
areas and, while summer deadlines issued in 2015 — Draft Circular 2
(June 2017), and
are targeted, perhaps the depth of – which allocated the combined
Hard-to-value intangibles
some papers which will be published profits among related parties by
(imminently).
in that timescale will have to be analyzing how much they
An updated version of the OECD TP limited. Non-consensus documents contributed to value creation.
Guidelines and Commentary are also ahead of further discussions are more
due later this year. likely than definitive proposals. Regional or socio-economic groupings
are increasingly impacting tax around
There appears to have been little Impact of specific country and the world as well.
follow-up work done recently on the regional reform
design of the threshold and other BEPS has started to take more of a The EU has taken steps which
implementation issues for low value ‘back seat’ in the media in relation to look to implement the OECD
adding services. major tax reforms that are being BEPS Report recommendations,
considered around the world. The but in some instances has gone
Recommencement of work on the focus on BEPS may therefore be further. Its anti-tax avoidance
digital economy questioned. directives (ATAD I and shortly
ATAD II, agreed politically and to
The Task Force on the Digital Among specific countries, some of the be formalised in an ECOFIN
Economy (Action 1) was not due to highest profile reforms are set out Council meeting shortly) include
reform until nearer the 2020 deadline below. more wide-ranging proposals on
to review what effective unilateral
hybrids and rules on exit charges.
actions countries have adopted, how US tax reform could significantly
The switch of focus to ‘tax
digital business have evolved and how impinge on BEPS
certainty’ for business may be one
BEPS measures have impacted the implementation. The focus will
deterrent to further extreme
digital space. However, the G20 certainly be on other issues, with
measures. State aid investigations
Presidency (Germany) has been keen significantly reduced corporate
are also helping to shape issues,
to progress digital transformation tax rates a distinct possibility.
particularly around arm’s length
generally and, as a result, the tax Transfer pricing could cease to be
pricing. The impact of the United
element needs to be accelerated. A relevant in a US regime involving
Kingdom leaving the EU and the
‘Whole of OECD’ project looking at destination-based cash flows,
terms of this Brexit are uncertain.
digital is aimed at making that were the House Blueprint to play
The creation of an Economic
something positive for all society. Tax a key part.
Community within the
is just ’one small component’ of this India is in the process of
Association of Southeast Asian
exercise. implementing a new VAT/GST
Nations (ASEAN) in 2015 has
regime and introducing a general
In particular, apart from matters changed the dynamic in the
anti-avoidance rule (GAAR).
highlighted previously in Action 1, the region. The 2025 Blueprint is a
However, the 2017 Budget and
task force will be asked to look at the commitment to “discuss measures
subsequent Finance Bill which
sharing economy and how tax to address the issue of base erosion
received Presidential assent on 31
administrations are dealing with the and profit shifting to ensure fiscal
March 2017 introduced a number
additional challenges posed. It may health”.
of BEPS-related measures, so
also address the topical questions of Many consider the Middle East to
parallel development seems
whether and how to tax robots. be a low tax, or even a ‘no tax’
feasible. They may be inclined to
Specifics of this project are apparently area, but the taxation regimes in
badge unilateral measures such as
not yet fully defined. An interim the region can be complex and
7 pwcTax Policy Bulletin
challenging to manage, and their The takeaway This process may also be impacted by
implementation can give rise to the political impetus for specific tax
uncertainty and confusion, which There has been a lot of work going on reforms in individual countries and
in turn creates risk. This will be within the OECD and Inclusive specific regions.
even more important with the Framework countries even though
Gulf Cooperation Council decision we’ve seen few published documents. Consensus in an OECD context has
to introduce VAT across many always allowed for countries to
BEPS implementation, monitoring reserve their positions in specific
countries in the region, and the and further standard setting all now
BEPS reforms considered likely. circumstances and this may be an
involve the wider group of nearly 100 increasingly prevalent practice in the
PwC comment: There will be countries signed up to the Inclusive future. The creation of toolkits
additional pressures on BEPS Framework. specifically for low income and
recommendations by political and Reaching consensus among this larger developing countries by the Platform
economic needs. Where these involve group of countries may prove difficult for Collaboration on Tax may help
groupings of countries, that pressure (although peer review lead to a kind of two-speed approach
can be heightened. It could result recommendations require consensus with matters affecting mainly the
either in delays, refusal to implement minus one to prevent any single larger developed countries not held up
recommendations or divergent actions country blocking a route forward). unnecessarily.
or wider and swifter adoption with
greater consistency.
Let’s talk
For a deeper discussion of how these issues might affect your business, please call your usual PwC contact. If you don’t have
one or would otherwise prefer to speak to one of our global specialists, please contact one of the people whose details are set
out below.
Stef van Weeghel, Amsterdam Aamer Rafiq, London Pam Olson, Washington
+31 (0) 88 7926 763 +44(0)20 721 28830 +1 (202) 414 1401
stef.van.weeghel@nl.pwc.com aamer.rafiq@pwc.com pam.olson@pwc.com
Phil Greenfield, London Edwin Visser, Amsterdam Will Morris, London
+44 (0) 20 7212 6047 +31 (0) 887923611 +1 (202) 312 7662
philip.greenfield@pwc.com edwin.visser@nl.pwc.com william.h.morris@pwc.com
Dave Murray, London
+44 (0) 7718 980 899
david.x.murray@pwc.com
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