Commenting on today's OECD Base Erosion and Profit Shifting (BEPS) announcement, Wendy Nicholls, tax partner at Grant Thornton UK LLP, said:
"The OECD has today issued its reports on the BEPS project undertaken with the G20 and deserves much credit for the progress it has made in the last two years. But although the reports today have been billed as the 'final' BEPS reports and will be applauded by the G20 at their meetings in Lima this week, the devil is in the detail.
"The OECD admit there is much work to be done over the next months and years, and a lot will depend on implementation – or otherwise - by countries themselves.
"Although a few items are mandatory 'red lines' (such as ensuring patent box type regimes are linked to where the IP is created, or the disclosures to tax authorities by big groups in country by country reports), many of the recommendations are billed as 'best practices' only and we fear may not be widely or consistently adopted. We have already seen many countries setting out their own rules and interpretations or 'jumping the gun' on some measures by acting alone.
"The OECD recognises that the risks of double taxation have increased in recent times and the BEPS project, in reducing the opportunities for tax planning, may possibly make this trend worse.
"Some countries have agreed to work towards mandatory binding arbitration in tax disputes, including some big players like the US and UK, but unfortunately many of the huge new economies like India, China and Brazil, have not done so.
"The OECD and G20 are keen to continue to engage with a wide range of developing countries and will work hard on this going forward.
"On the contentious topic of unitary taxation, it was interesting to note that not one country wanted to go down this route. The glacially slow progress by the EU towards looking at a common consolidated tax base provides evidence of the problems of this seductively simple idea. So the arm’s length standard for transfer pricing remains agreed as the best tool available to help governments and companies to invest and support growth and jobs."