Europe Ahead On BEPS Implementation, Says EY
European Union member states are taking the lead on implementing the Organisation for Economic Co-operation and Development’s recommendations under the base erosion and profit shifting (BEPS) project, a new EY report says.
EY’s Outlook for global tax policy in 2016 report highlights that, of the 14 jurisdictions (37 percent) either experiencing or forecasting legislative change to address BEPS Action 2 requirements on hybrid mismatches, 12 are EU member states.
Transfer pricing reform – a key component of the OECD’s October 2015 recommendations – will also be prominent in 2016, with 18 of 38 jurisdictions surveyed (47 percent) indicating changes in this area that will result in increased tax burden. Changes in tax enforcement approaches, meanwhile, are forecast to increase the overall tax burden in 14 of the 38 countries (37 percent) in the year ahead.
Calls for greater tax transparency and disclosure by both the OECD and EC are driving further activity, the report says, with 69 percent of jurisdictions surveyed by EY citing transparency requirements (BEPS Action 13) as their first or second BEPS implementation priority.
The report highlights that many countries appear to be waiting for early adopters to set the pace before introducing new national tax rules and that a majority of countries are yet to begin implementation of most of the 15 BEPS recommendations.
Chris Sanger, EY’s Global Tax Policy Leader, said: “The lion’s share of BEPS-driven change appears to be ahead, and not behind us. Given the sheer number of variables reflected in the final BEPS recommendations, and the complexity inherent in coordinating between domestic tax systems globally, there may be significant distance between agreement in the OECD process and national adoption in 2016 and beyond.”
“Europe’s drive for increased harmonization is increasingly placing it at the center of BEPS implementation. However, the numerous initiatives led by different EU bodies could create an uncoordinated approach.”
