Base Erosion and Profit Shifting (BEPS) is the OECD’s policy response to perceived aggressive tax avoidance by multinational corporations.
Base Erosion and Profit Shifting (BEPS) is the OECD’s policy response to perceived agg...
Base Erosion and Profit Shifting (BEPS) is the OECD’s policy response to perceived aggressive tax avoidance by multinational corporations. The BEPS project is endorsed by the G20 Finance Ministers and Heads of State, consisting of 15 Actions which are intended to address many issues across the tax spectrum. With issues varying from transparency to financing to transfer pricing, BEPS will impact any business that operates in multiple territories.
On 5 October 2015, the final proposals for the 15 BEPS Actions were delivered to the G20 Finance Ministers. The documents set out the conclusions of the last two years’ work, together with a plan for the follow-up work and a timetable for implementation. It also set the stage for the implementation of the various proposals at a local country level.
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Isle of Man Country-by-Country Reporting
Action 13 of the OECD’s Base Erosion and Profit Shifting (“BEPS”) project concerns transfer pricing documentation. One of the requirements of Action 13 is that large multi-national enterprises (“MNEs”) must file an annual Country-by-Country Report that contains, for each jurisdiction in which they do business, certain key information pertaining to revenue, profit and income taxes payable. For these purposes, an MNE is, in broad terms, a group which has consolidated annual revenue of more than €750m.
The Isle of Man has introduced regulations giving effect to this requirement for Isle of Man companies (see here for a full copy). The regulations apply to fiscal years commencing on or after 1 January 2017 and contain a report filing obligation for Isle of Man parent companies of MNEs (or, in certain situations, Isle of Man subsidiaries of non-Isle of Man MNE group parents) and a notification requirement for all Isle of Man resident companies which are part of an MNE group. It is anticipated that this latter requirement will, in practice, be capable of being met as part of the normal annual tax return filing process, albeit this has yet to be confirmed.