Welcome!

Mobile IoT Authors: Pat Romanski, Liz McMillan, Yeshim Deniz, Zakia Bouachraoui, Elizabeth White

News Feed Item

KPMG: OECD Action Plan Is Significant Development in Global Collaboration To Modernize International Tax System

Action Plan Could Signal Seismic Shift in Tax Landscape, But Significant Challenges Lie Ahead

NEW YORK, July 19, 2103 /PRNewswire/ -- While today's Action Plan on Base Erosion and Profit Shifting from the Organisation for Economic Co-operation and Development (OECD) — presented to the G-20 finance ministers at their meeting in Moscow — represents a significant development in global collaboration to modernize the international tax system, the scale of the report and its ambitions for change could signal a potential seismic shift in the international tax landscape, according to KPMG LLP, the U.S. audit, tax and advisory firm.

Commenting on the Action Plan on Base Erosion and Profit Shifting (Action Plan) published by the OECD today, Greg Wiebe, Global Head of Tax at KPMG International, said: "Bringing today's proposals to fruition within the 24-month timetable presents an enormous challenge. There is undoubtedly an urgent need to work quickly as uncertainty helps no one, but modernizing over 75 years of international tax laws in just two years' time without jeopardizing the aspects of the current system that operate as intended and are fit for purpose will not be straightforward."

Manal Corwin, principal and national leader for International Corporate Services at KPMG LLP and former deputy assistant secretary for tax policy for international tax affairs at the U.S. Treasury Department, also commented: "Today's report proposes significant changes to the international tax landscape in a very short period of time. We are encouraged that the OECD is emphasizing the importance of consulting with a range of non-governmental stakeholders as it moves forward. KPMG believes this dialogue is a critical step to the plan's ultimate success, and we look forward to engaging constructively with the OECD during the consultation process."

Action Plan Addresses Several Key International Tax Areas

KPMG LLP highlighted that today's Action Plan focuses on a number of key areas including the digital economy, intangibles, hybrid mismatch arrangements, harmful preferential regimes, aggressive tax planning, and greater transparency and disclosure.

The "digital economy" in its broadest sense presents difficult and complex issues to international business. KPMG LLP's Corwin said "we welcome the planned holistic approach to understanding the business models in this sector before making specific proposals."

The plan's call for action to address what it refers to as "hybrid mismatches" was anticipated and is likely to have a significant impact on multinational companies. KPMG LLP said this is also likely to be one of the most ambitious areas of the plan as it will require changes to domestic law and extensive coordination among countries.

The Action Plan also calls for revamping the work on what it describes as "harmful tax practices" adopted by certain jurisdictions. "We believe providing clarity and establishing consensus around the criteria for identifying these practices versus acceptable tax competition would be welcome," Corwin said.

The Action Plan also calls for improving mechanisms for dispute resolution. "We encourage the widespread adoption of mandatory arbitration and recommend the OECD go further in opening up access to the Mutual Agreement Procedure (MAP) to facilitate earlier and swifter resolution of disputes," said Corwin of KPMG LLP.

Areas for Ongoing Dialogue

Although the OECD's earlier report (issued in February 2013) indicated it did not intend to depart from the arm's length principle in regard to transfer pricing, today's Action Plan suggests that consideration is now being given to measures which go beyond that principle. KPMG LLP said a departure from this universally established standard raises serious concerns.

The Action Plan proposes changes to domestic legislation to require greater "disclosure" to global tax authorities regarding certain "aggressive transactions."  KPMG LLP said that providing clear definitions and establishing consensus as to the transactions to which this will apply will be essential to the effectiveness of this proposal.

The Action Plan also calls for enhanced documentation requirements. "The proposals around re-examining transfer pricing documentation appear to be moving toward a version of country-by-country reporting to tax authorities," said Corwin of KPMG LLP. "If this is what is intended, it will be important to ensure that the practical considerations and costs to the taxpayer are fully assessed and appropriately taken into account relative to the benefits such reporting would serve in addressing base erosion and profit shifting."

In addition, a number of the proposals will require domestic law changes that may be in conflict with European Union rules (such as limitations on the deductibility of interest expense, Controlled Foreign Corporation rules and treaty anti-abuse rules). KPMG LLP noted that, in the past, resolving these conflicts has presented significant challenges. It is not clear whether the potential benefits of a coordinated action plan will provide sufficient incentives to overcome these challenges.

Finally, the Action Plan proposes adoption of a multilateral convention among participating governments to implement a number of the proposed actions. KPMG LLP's Corwin said: "This will present some considerable challenges, but it may be the only realistic mechanism for effecting change within the proposed time frames."

About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com), is the U.S. member firm of KPMG International Cooperative ("KPMG International").  KPMG International's member firms have 152,000 professionals, including more than 8,600 partners, in 156 countries.

About KPMG International
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have more than 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

Contact: Robert Nihen/Bridget Carroll
KPMG LLP
201-307-8296/201-505-6501
[email protected]; [email protected]

SOURCE KPMG LLP

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

IoT & Smart Cities Stories
Bill Schmarzo, author of "Big Data: Understanding How Data Powers Big Business" and "Big Data MBA: Driving Business Strategies with Data Science," is responsible for setting the strategy and defining the Big Data service offerings and capabilities for EMC Global Services Big Data Practice. As the CTO for the Big Data Practice, he is responsible for working with organizations to help them identify where and how to start their big data journeys. He's written several white papers, is an avid blogge...
Nicolas Fierro is CEO of MIMIR Blockchain Solutions. He is a programmer, technologist, and operations dev who has worked with Ethereum and blockchain since 2014. His knowledge in blockchain dates to when he performed dev ops services to the Ethereum Foundation as one the privileged few developers to work with the original core team in Switzerland.
René Bostic is the Technical VP of the IBM Cloud Unit in North America. Enjoying her career with IBM during the modern millennial technological era, she is an expert in cloud computing, DevOps and emerging cloud technologies such as Blockchain. Her strengths and core competencies include a proven record of accomplishments in consensus building at all levels to assess, plan, and implement enterprise and cloud computing solutions. René is a member of the Society of Women Engineers (SWE) and a m...
Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life settlement products to hedge funds and investment banks. After, he co-founded a revenue cycle management company where he learned about Bitcoin and eventually Ethereal. Andrew's role at ConsenSys Enterprise is a mul...
In his general session at 19th Cloud Expo, Manish Dixit, VP of Product and Engineering at Dice, discussed how Dice leverages data insights and tools to help both tech professionals and recruiters better understand how skills relate to each other and which skills are in high demand using interactive visualizations and salary indicator tools to maximize earning potential. Manish Dixit is VP of Product and Engineering at Dice. As the leader of the Product, Engineering and Data Sciences team at D...
Dynatrace is an application performance management software company with products for the information technology departments and digital business owners of medium and large businesses. Building the Future of Monitoring with Artificial Intelligence. Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more busine...
Whenever a new technology hits the high points of hype, everyone starts talking about it like it will solve all their business problems. Blockchain is one of those technologies. According to Gartner's latest report on the hype cycle of emerging technologies, blockchain has just passed the peak of their hype cycle curve. If you read the news articles about it, one would think it has taken over the technology world. No disruptive technology is without its challenges and potential impediments t...
If a machine can invent, does this mean the end of the patent system as we know it? The patent system, both in the US and Europe, allows companies to protect their inventions and helps foster innovation. However, Artificial Intelligence (AI) could be set to disrupt the patent system as we know it. This talk will examine how AI may change the patent landscape in the years to come. Furthermore, ways in which companies can best protect their AI related inventions will be examined from both a US and...
Bill Schmarzo, Tech Chair of "Big Data | Analytics" of upcoming CloudEXPO | DXWorldEXPO New York (November 12-13, 2018, New York City) today announced the outline and schedule of the track. "The track has been designed in experience/degree order," said Schmarzo. "So, that folks who attend the entire track can leave the conference with some of the skills necessary to get their work done when they get back to their offices. It actually ties back to some work that I'm doing at the University of San...
When talking IoT we often focus on the devices, the sensors, the hardware itself. The new smart appliances, the new smart or self-driving cars (which are amalgamations of many ‘things'). When we are looking at the world of IoT, we should take a step back, look at the big picture. What value are these devices providing. IoT is not about the devices, its about the data consumed and generated. The devices are tools, mechanisms, conduits. This paper discusses the considerations when dealing with the...