New BEPS regime tripping up tax executives


The new BEPS regime is tripping up tax executives globally – which could cost enterprises hundreds of thousands in penalty fees, according to Ben Scull, managing director at Thomson Reuters Australia and New Zealand.

Schull writes in Accountants Daily that Thomson Reuters’ recent global survey of companies confirms that Country-by-Country reporting presents many challenges for tax teams.

“Country-by-country (CbC) reporting requires a multinational’s ultimate parent entity to summarise the activity of its entities in each of the countries in which it operates. It must then submit the report to its home tax authority and share it with other tax authorities. The report must list in a precise format – for each national entity – the functions performed, assets owned, personnel employed, revenue generated, profits earned, taxes paid, capital structure and retained earnings.

“The first obstacle to overcome in Country-by-Country reporting, then, is the sheer quantity of information required. Printed out, this information can fill more than 100 pages, plus attached agreements.

“In addition to this, much of the information may be hard to gather and analyse. Analysts from various firms have noted that tasks such as splitting headcount and intangible assets between entities are challenging many tax teams.

“Then, there is the IT challenge. As you extract and analyse the data, you ideally need a system that can store all this information and then output it in the formats needed for BEPS compliance. You may also need to make changes to existing systems.

For Australia, if the work is not done to the looming deadline, the fine is up to $525,000.

Thomson Reuters surveyed 135 corporate executives and
tax and transfer pricing executives across dozens of countries and industries.

According to the survey report, multinational enterprises (MNEs) are generally expressing more confidence about their understanding of and anticipated management of their BEPS obligations than they did in past surveys. While many MNEs indicated what steps are needed to prepare for BEPS, many of those preparations are still underway.

63% of respondents are still in the process of making changes or updates to their operations based on BEPS recommendations.

90% of respondents said that they were finding it slightly difficult to keep up with new BEPS developments and requirements in countries where they operate.

While transfer pricing documentation and CbC reporting still causes concern among approximately one third of respondents, this is a significant drop from 2016 year, when 83% were most concerned about it.

The report is available here.