BEPS Likely To Have Significant Impact On International Tax Rules, Global Tax Update

Welcome to this special edition of Jones Day's Global Tax Update.

Almost two years ago, the Organisation for Economic Co-operation and Development launched a radical and far-reaching review of the international tax system. The project's name, BEPS (base erosion and profit shifting), provides a good insight into its objectives: it is nothing less than an attempt by the OECD to proof the international tax system against what is perceived as widespread tax avoidance by multinational enterprises.

Because of its wide-reaching nature, the work of the BEPS project was split into 15 action groups dealing with such diverse topics as the digital economy, hard to value intangibles and hybrid mismatches. In this special edition of Jones Day's Global Tax Update newsletter, Jones Day tax lawyers provide summaries of the seven action groups of the BEPS project that have already reported. The other eight action groups are due to report at the end of September 2015, and a further edition of the BEPS special edition will be published as soon as possible after that.

Even though the BEPS project has not ended, there is no mistaking that it will likely have a profound impact on the international tax system. Some countries have already started implementing their own versions of the BEPS recommendations. In its 2015 Finance Act, the UK introduced the diverted profits tax, a new tax which aims to counter arrangements in which MNEs ensure that their presence in the UK falls short of constituting a permanent establishment and therefore escape UK tax. The new rules are wide and despite what may first appear, are likely to catch situations which are not currently contemplated. They also seek, very...