Managing Controversy after BEPS

Has BEPS increased the risk of tax controversy?

Yes, the lack of clarity around the implementation of the BEPS Action Plans by countries is invariably leading us to a world of unavoidable tax disputes. It is increasingly difficult to wholly identify and comply with all the legislative norms applicable to corporate taxpayers in today’s post-BEPS world.

The unclear status of countries, particularly, on issues such as hybrid mismatches, treatment of interest income, attribution of profits to a permanent establishment, and the adoption of the multilateral Instrument makes absolute compliance almost virtually impossible. Moreover, although tax disputes have always come with extensive court battles and hefty economic burden, the BEPS-project has brought in an additional risk of damage to a company’s reputation. This makes the management and resolution of disputes a priority for boards of MNEs.

Does proactivity help in avoiding controversy?

Yes, with increasing and uncertain compliance obligations, taking appropriate proactive measures (and communicating them clearly to all stakeholders) significantly reduces the chances of an MNE getting into a dispute. Such proactive measures can range from rulings from one or more governments to conducting a value chain analysis to align global allocation of income with economic activity leading to generation of that income.

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Source: TPA Global
 

TPA BEPS Desk

Transfer Pricing Associates introduces TPA BEPS Desk. If you have any questions, or need more detailed advice on any aspects of BEPS related issues, please get in touch with us. The TPA Global network has alliance partners throughout the world, and the network can provide multi-disciplinary approach on today's critical transfer pricing challenges faced by multinational enterprises.

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