OECD proposals could save countries US$240bn in lost taxes
With the bulk of the OECD’s work on the BEPS project complete, attention will now turn to the implementation of the recommendations by member countries and others.
Minister for Finance, Michael Noonan said that he welcomed the Base Erosion and Profit Shifting (Beps) report, and that the OECD’s proposals would “play to Ireland’s advantage”.
“We have an agreement”. “It is just the start of the work, but we are moving into a new phase where massive tax planning and avoidance is over”. “We have something that is strong and substantial”.
Yesterday the OECD, the Paris-based multilateral economic organisation, unveiled the outlines of a plan of action to crack down on aggressive corporate tax avoidance. Saint-Amans described that as a “very conservative” figure.
Accountants say it’ll mean law changes in New Zealand but the tax system here is already pretty robust.
Mr Engel said multinationals are rightly concerned that the Beps project can have – and is having – potentially adverse consequences. “You could have a cash box in a tax haven where there is nobody”. But Saint-Amans said companies including Starbucks and Amazon were already unwinding arrangements to comply with the OECD proposals.
The steps, which are aimed at ensuring a “comprehensive, coherent and co-ordinated reform of the worldwide tax rules”, have been prepared by the Organisation for Economic Cooperation and Development (OECD), which sets the global taxation standards. We’re going to look at the R&D. “Given developing countries’ greater reliance on CIT revenues as a percentage of tax revenue, the impact of BEPS on these countries is particularly significant”, the statement added.
The tax changes, expected to be backed by the G20 Finance Ministers’ meeting in Lima on Thursday and the full G20 Leaders’ Summit in Turkey on 15 November, will affect all businesses with cross-border operations.
Britain’s tax gap of £34billion is partly caused by firms funnelling profits overseas, leaving ordinary taxpayers to foot the bill.
The new measures also include a changed definition of the phrase “permanent establishment” to address techniques used to avoid payment of tax.
Groups will also be restricted from taking out high-interest loans from other parts of the company based in low tax areas. But, it added, big business and tax lobbyists had put a check on the achievements. Controlled Foreign Company Rules4. The argument is that, by introducing the DPT ahead of the BEPS recommendations, the United Kingdom government has taken the initiative, and is sending a clear statement that Britain is open for business – and that multinationals are welcome to benefit from a competitive tax regime, on the proviso that they do not artificially divert profits generated here. The measures included instituting country-by-country reporting, clamping down on “treaty shopping”, and putting an end to “double non-taxation”.
The levy became known as the “Google tax”, reflecting the tax authorities’ difficulties in pinning down the jurisdiction of technology companies without the warehouses and supply chains normally used to determine where a firm is based.
“Most multinationals are likely to be affected in a few way”.
Time will tell, but they should make a difference.
The report set out a method for assessing whether there is substantial activity in a jurisdiction. Places like Ireland, where typically inward investors have big substantive operations with hundreds or thousands of employees are likely to benefit from these measures because the thrust of the new measures is that if you have substance, premies and employees it is ok to locate profits there and pay tax in that country, he explains. “This will ensure that taxes that were due will be paid…” He also supports imposing a minimum tax on companies, similar to a proposal by President Barack Obama’s administration.
These changes are important as many small and medium-sized New Zealand enterprises go offshore early in their business lifecycle.
These are overall legal practices.
