Category: Hybrids

Neutralizing the effects of Hybrid Mismatch Arrangements

IN THIS second installment of the series on Base Erosion and Profit Shifting (BEPS) 2014 deliverables, we will discuss the recommendations of the Organization for Economic Co-operation and Development (OECD) on how to neutralize the effects of Hybrid Mismatch Arrangements. A Hybrid Mismatch Arrangement refers to an arrangement whereby companies,… – Continue reading

Recent progress in the OECD’s BEPS project

Within the framework of the BEPS (Base Erosion and Profit Shifting) action plan, adopted in July 2013, on last September 16, the OECD published its first recommendations in the form of reports on 7 of the 15 points of the action plan: Address the tax challenges of the digital economy… – Continue reading

The OECD’s BEPS Action Plan poses immediate challenges for oil and gas companies

Already on the radar of governments and regulatory bodies around the world, recent developments with respect to the Organization for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) Action Plan are raising further the profile of oil and gas companies globally with both tax authorities and the… – Continue reading

A two-minute nutshell on the UK’s proposed “Google Tax” – the “diverted profits tax” or “DPT”

The UK is proposing to introduce a unilateral, non-OECD co-ordinated anti-BEPS provision, referred to in the media as the “Google Tax”, with effect from 1 April 2015. The draft provision is very complex, and it will be time consuming to assess its potential impact on many common cross-border business structures…. – Continue reading

Will a Sponge Tax Soak Up BEPS Concerns?

As the Organisation for Economic Co-operation and Development (OECD) passes the halfway point in its joint project with the G20 to address base erosion and profit shifting (BEPS) concerns, it is worth pausing to examine what the consequences of some of the proposed changes may be. Much of the focus… – Continue reading

Cayman begins to see a rise in hybrid funds

UBS Fund Services has had one of its strongest years in terms of winning new clients according to Monette Windsor (pictured), who heads up the Cayman Islands business.   “We’ve invested heavily in our business development team this year and we’ve had to beef up our client onboarding team. We have 165… – Continue reading

The OECD action plan on Base Erosion and Profit Shifting

IN TAX, the latest global buzzword is “BEPS” or base erosion and profit shifting. BEPS refers to the practice of multinational corporations (MNCs) of shifting profits from high tax jurisdictions to low tax jurisdictions as a tax mitigation strategy. In February 2013, the Organization for Economic Co-operation and Development (OECD)… – Continue reading

UK: Taxation Of Multinationals – UK Government Announcements Related To The G20/OECD Base Erosion and Profit Shifting Initiative

The Chancellor reaffirmed the Government’s continued support for the OECD’s work on base erosion and profit shifting (BEPS) and modernisation of the international framework for taxing multinational companies. Measures in relation to three specific areas are announced – a consultation on hybrid mismatches and the introduction of the OECD’s proposals… – Continue reading

Autumn Statement 2014: UK plans to raise £1bn with ‘Google tax’

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. The UK announced plans to raise over £1bn over the next five years from a new “diverted profits”… – Continue reading

United Kingdom – Hybrid mismatch arrangements consultation, other BEPS-related focus

December 3:  The UK government today issued items that focus on multinational corporations and follow the OECD’s base erosion and profit shifting (BEPS) action plan—one issuance being a consultation document concerning hybrid mismatch arrangements, and the other being the Autumn Statement 2014 that includes provisions relating to country-by-country reporting, the… – Continue reading

Canada: The BEPS Deliverables: A Macro Critique

What unites the dates February 12, 2013, July 19, 2013, and September 16, 2014? They are the key dates to this point in the OECD’s crusade against base erosion and profit shifting, which will be remembered either as a well-coordinated campaign against abusive tax avoidance by large multinational enterprises, or… – Continue reading

Progress reports released on tax avoidance

Progress reports released on tax avoidance Revenue Minister Todd McClay today released two reports from officials relating to tax avoidance by large multinational companies. The reports provide an update on policy work being undertaken in line with the OECD Action Plan and also outline the expected timeline for related policy… – Continue reading

Base erosion and profit shifting – a South African perspective

The concept of base erosion and profit shifting (BEPS) has been debated at various international forums following discussions at the G20 Finance Ministers and Central Bank Governors meeting and the G20 Heads of State summit in Russia last year. The Organisation for Economic Co-operation and Development’s (OECD) BEPS Action Plan… – Continue reading

Clampdown on tax avoidance

By closing the tax gap, South Africa can reap billions of rands to benefit the economy. A global crackdown on tax avoidance has begun and South Africa is forging ahead in a bid to tackle wealthy individuals and corporates who practise this tactic. The initiative is better poised to succeed… – Continue reading

Base Erosion and Profit Shifting: The Australian Perspective

Background In July 2013, the G20 Finance Ministers, including Australia, fully endorsed the base erosion and profit shifting (BEPS) Action Plan. As a result of the Action Plan, the Australian government encouraged a new commitment to focus resources on investigating international business structures to ensure companies pay tax in the… – Continue reading

German Federal Fiscal Court decides on treatment of hybrid entities under the German-US double taxation treaty 14 November 2014

Hybrid entities have long been a tool for corporate tax planning. While tax authorities have fought the use of such hybrid mismatches for tax planning purposes, national efforts to prevent the use of hybrid mismatches have not proven to be very efficient, explain Michael Graf and Timothy Santoli, of Dentons… – Continue reading

Medical supplies group used Irish firm in tax deal

Covidien transferred right to $6.9bn loan to new entity Multinational medical supplies group, Covidien, transferred the right to loans totalling $6.9 billion from Luxembourg to a new Irish company as part of an elaborate inter-group tax planning arrangement agreed with the Luxembourg tax authorities in 2009. Under the deal, the… – Continue reading

Countries and Companies Join OECD BEPS Train

The OECD’s Action Plan on BEPS was published in July 2013 to reform the international tax system. The Action Plan identified 15 Actions to address BEPS. Seven of the 15 Action Plan items are now moving out of the station. I. Introduction On September 16, 2014 the OECD, together with… – Continue reading

Interest deductions: the new war on base erosion

ITR Correspondent • • • The G20 and OECD’s Base Erosion and Profit Shifting (BEPS) project has rarely been out of the headlines during 2014. At the heart of the BEPS project is the assumption international tax rules make it possible for profits to be taxed in countries that are… – Continue reading

OECD releases finalised proposals on key tax base erosion concerns

Introduction Action 1: the digital economy Action 2: hybrid mismatch arrangements Action 5: harmful tax competition Action 6: preventing tax treaty abuse Action 8: guidance on transfer pricing and intangible assets Action 13: transfer pricing documentation and country-by-country reporting Action 15: developing a multilateral legal instrument Next steps Introduction On… – Continue reading

BEPS, Broken Promises, and What the OECD Can Learn from the WTO About Dispute Settlement Procedures

The question has often arisen whether “international law” is an oxymoron – whether “obligations” in income tax treaties and other international agreements are really binding upon the parties, when they are not buttressed by some sort of enforcement mechanism. That question has never been more relevant in the tax world… – Continue reading

Worldwide: OECD Releases First BEPS Recommendations To G20 In Accordance With Action Plan

As a part of the OECD/G20 project to combat base erosion and profit shifting (“BEPS”), the OECD released the first set of reports and recommendations on September 16, 2014. These reports address seven of the actions described in the 15-point action plan to address BEPS published in July 2013 (the… – Continue reading

UK government promises early consultation on new multinational tax avoidance rules

The UK government will shortly set out how it plans to implement globally agreed rules to prevent multinational companies from using artificial techniques to significantly reduce their tax bills, it has announced.06 Oct 2014 Tax Tax Disputes and Investigations UK Europe It has confirmed that it will consult on the… – Continue reading

Osborne proposals for anti-abuse tax rules could damage UK competitiveness, expert warns

Plans to tackle UK tax avoidance by international technology companies could damage UK competitiveness if they are brought in before international measures are finalised, a tax law expert has warned.02 Oct 2014 Corporate tax Tax Tax Disputes and Investigations TMT Advanced Manufacturing & Technology Services UK Europe Heather Self of… – Continue reading

Tax avoidance under scrutiny

European Union Tax Commissioner Algirdas Šemeta has welcomed a raft of new measures to combat international tax avoidance, in agreement between the finance ministers of the G20 at a meeting in Cairns, Australia. The ministers have agreed on a several recommendations that were made to address key areas which were… – Continue reading

International Tax Alert: OECD Releases BEPS Papers

Yesterday saw the release of the first set of deliverables under the OECD’s project on base erosion and profit shifting (BEPS).  These constitute the “building blocks” for an internationally agreed and co-ordinated response to government and media concerns in recent years about the perceived way in which shortcomings in relevant… – Continue reading

OECD outlines anti-tax avoidance plan

THE CLAMPDOWN on tax avoidance by multinational corporations has been bolstered by a series of recommendations made by the OECD. 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 particular, the companies have… – Continue reading

OECD releases 2014 BEPS deliverables

On September 16, 2014, the Organisation for Economic Co-operation and Development (OECD)  released its first seven of 15 deliverables under the OECD/G20 base erosion and profit shifting (BEPS) project (the 2014 BEPS Package). The 2014 BEPS Package arises from the Action Plan on Base Erosion and Profit Shifting (the BEPS Action Plan),… – Continue reading

The Global Crackdown on Profit Shifting

CFOs of multinationals need to prepare by assessing how much their companies engage in profit shifting to cut their taxes. Do you have responsibility, whether direct or dotted line, for the tax function in your company? Does your company have, or plan to have, operations outside the United States? If… – Continue reading

Commissioner Šemeta welcomes Council agreement on measures to fight tax avoidance

“Ladies and Gentlemen, Our campaign against corporate tax avoidance marches on, with further important advances today. I am delighted that Finance Ministers have agreed on a crucial revision to the Parent-Subsidiary Directive, which will block a prevalent form of aggressive tax planning, known as hybrid loan arrangements. No longer will… – Continue reading

OECD targets Macquarie offshore tax-saving schemes

Aggressive tax strategies pioneered by Macquarie Group are under scrutiny both internationally and in Australia, putting at risk techniques the company has used to claim more than $1.3 billion in deductions. The Organisation for Economic Cooperation and Development is targeting ”foreign tax credit generators” as part of its battle against… – Continue reading