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BEPS Project Had Low Impact On Corporations: Survey

by Lorys Charalambous,, Cyprus

21 September 2016

The Organisation for Economic Co-operation and Development's base erosion and profit shifting (BEPS) project has had little impact on the way businesses plan their tax affairs, a global survey of 2,600 businesses across 36 countries has revealed.

A survey conducted by financial advisory firm Grant Thornton reveals that 78 percent of businesses have not changed their business's approach to taxation, despite more than 80 countries having agreed to adopt at least the minimum elements of the BEPS Action Plan.

The lack of impact is even greater in the Group of Seven countries (83 percent), with 89 percent of US businesses and 86 percent of UK businesses saying that BEPS has had little impact on their tax planning. According to the businesses surveyed, BEPS has had the greatest impact on business tax planning in the countries of Indonesia (35 percent), Nigeria (38 percent), and India (36 percent).

As part of the BEPS plan, businesses are being asked to provide corporate tax information to local and international authorities, and the two greatest concerns with the practice is the additional administrative burden it creates (25 percent) and cyber security concerns (15 percent). Additional administrative burden was cited by 35 percent of businesses in UK and by 32 percent in the US.

Francesca Lagerberg, Global Leader of Tax Services at Grant Thornton International, said: "It is fascinating that after the initial excitement around BEPS, and its potentially game-changing elements, so few in the survey have taken active steps to change what they are doing. The reasons for this are likely to be many. A number of companies will be reluctant to be the first mover in this area and may be looking to see what others are doing in their industry or region. Governments have not yet explained how or even if they will implement BEPS in some countries, so that leads to business caution."

Lagerberg added: "Equally, business leaders prefer the black and white to the grey on tax issues, so businesses would undoubtedly benefit from more guidance on what they should do next. Many will have been bitten by retrospective legislation or rule changes on tax in recent years and will be nervous about action before the ground rules are clear. The recent EU action against Apple and its agreements with Ireland does not help make these tax issues any clearer for businesses."

TAGS: compliance | tax | investment | business | tax compliance | tax avoidance | law | Organisation for Economic Co-operation and Development (OECD) | enforcement | agreements | multinationals | legislation | tax planning | transfer pricing | tax reform | trade | services | BEPS

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