Tax policy and controversy briefing

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After two years, thousands of pages of discussion drafts, and many hours of meetings and public consultations, the Organisation for Economic Co-operation and Development (OECD), on 5 October 2015, released the final deliverables under its Base Erosion and Profit Shifting (BEPS) Action PlanThe in-depth negotiations of the last two years resulted in the issuance of 13 reports covering 15 BEPS Action items (Actions 8–10 were addressed in one report) that comprised almost 2,000 pages and a series of recommendations intended to improve the functioning of the international tax framework. The package was approved by the G20 finance ministers at their October meeting in Lima, Peru and then by the G20 leaders at their November summit in Antalya, Turkey.

The latest issue of our Global Tax Policy and Controversy Briefing is a special edition focusing on the recommendations. For each OECD report, we provide a factual commentary plus a supplementary point of view analysis and commentary by EY Tax leaders.

Regardless of whether they are actually based in the European Union (EU), companies now have to deal with the fact that the OECD is not only the only organization addressing BEPS. In 2015, various parts of the European machinery joined the European Commission in debating and proposing wide-ranging measures affecting business taxation. All European bodies will now have an extremely busy 2016 ahead of them, after early January saw the European Commission release an anti-tax avoidance package comprising four separate documents:

  1. A proposed EU Anti-Tax Avoidance Directive;
  2. a proposed directive implementing the automatic exchange of country-by-country (CbC) reports;
  3. a communication proposing a framework for a new EU external strategy for effective taxation
  4. a recommendation on the implementation of measures against tax treaty abuse.

BEPS is not just a tax issue

Business leaders prefer not to experience negative surprises. While they remain under pressure to sustain Effective Tax Rate (ETR), many more tax directors are now addressing the broader questions posed by these developments with their CEO, CFO and board. Some are extending those conversations to other external stakeholders, too. These are sensible choices. While the conversations may be challenging, they are more palatable than dealing with a potential negative outcome later in time.

Life as a tax leader has never been so challenging. We wish you all courage and success as we enter this new era together.