The recent Guardian article highlights the danger that the UK Diverted Profits Tax (DPT) has incited. Countries are acting unilaterally and/or in working groups (including the EU) to accomplish their fiscal objectives behind a thin veil of BEPS intentions. Most importantly, such actions may never be unraveled after the final OECD BEPS Guidelines are published.
Accordingly, we will have overlapping domestic and treaty provisions (including the arguable non-treaty DPT) for anti-avoidance rules, CFC rules, capturing low-taxed income from other jurisdictions in novel ways, non arms-length approaches, formulary calculations of the “right tax” and significant complexity for all. To the extent public disclosure of tax related data becomes a reality by the OECD or EU, many questions will arise on a very complex topic for which most people will not comprehend.
It is hopeful that countries put a full stop on BEPS activities until the Guidelines are finalized, after which such Guidelines can be adopted in their final form for overall consistency. Statements similar to the herein should be tempered by patience and a goal for global consistency. Thus, working group meetings that are scheduled prior to that time will only exacerbate the tsunami of international tax guidance and documentation that will take place.
A link to the article is attached for reference:
Joe Hockey, treasurer, provided the following statement:
Hockey said that the joint working group would enable Australia to go “further and faster” than the framework for change offered through multilateral groups like the OECD and G20.