A QUARTER of multinational companies will be unable to make the adjustments they need to before countries begin enacting the OECD’s Base Erosion and Profit Shifting (BEPS) recommendations in December 2017, a report from Thomson Reuters claims.
In a survey of 180 corporate executives and tax directors from 35 countries and 20 industries, it emerged nearly half of the multinational companies surveyed are not actively preparing for the complex reporting requirements they are likely to face.
That’s despite a significant amount of exposure with 66% of companies needing to review historical business structures and 29% anticipating implementing restructuring.
Over the next few months more than 78% of respondents said they will devote most time to the transfer pricing and country-by-country reporting elements of the BEPS action plan.
This week, the OECD published its final recommendations in curbing tax base erosion and profit shifting.
The package includes new minimum standards on country-by-country reporting, which for the first time will give tax administrations a global picture of the operations of multinational enterprises; treaty shopping, to put an end to the use of conduit companies to channel investments; curbing harmful tax practices, in particular in the area of intellectual property and through automatic exchange of tax rulings; and effective mutual agreement procedures, to ensure that the fight against double non-taxation does not result in double taxation.
Companies including Google, Amazon and Starbucks have been in the firing line for their use of offshore jurisdictions to drive down their UK tax liabilities in recent years.
The practice led MPs to dub their activities “immoral” as multinational companies’ tax affairs grew increasingly controversial. It is hoped the OECD’s efforts will ameliorate the problem as if prepares to present its work to the G20 in the Peruvian capital Lima this week.