OECD: BEPS Action 2 report; branch mismatches | KPMG Global
Share with your friends

OECD: BEPS Action 2 report; recommendations on branch mismatches

OECD: BEPS Action 2 report; branch mismatches

The Organisation for Economic Cooperation and Development (OECD) today released a report containing recommendations under Action 2 of the base erosion and profit shifting (BEPS) project. The topic of BEPS Action 2 is: Neutralising the effects of branch mismatch arrangements.


Related content

Today’s OECD report sets out recommendations for domestic rules to end the use of hybrid entities to generate multiple deductions for a single expense or deductions without corresponding taxation of the same payment. 

The OECD in 2015 issued a report that addressed mismatches that result from differences in the tax treatment or characterization of hybrid entities; however, the 2015 report did not directly consider similar issues that can arise through the use of branch structures. These branch mismatches occur when two jurisdictions take a different view as to the existence of—or the allocation of income or expenditure between—the branch and head office of the same taxpayer. As the OECD noted, these differences can produce the same kind of mismatches that are targeted in the 2015 report and thus raising the same issues in terms of competition, transparency, efficiency and fairness. 

Today’s report sets out recommendations for changes to be made to domestic law that would bring the treatment of these branch mismatch structures into line with outcomes described in the 2015 report.


Read an August 2017 report prepared by the KPMG member firm in the UK

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Request for proposal