Major companies concerned over OECD’s plans for global tax reform
MORE than half of big global and home-grown Irish companies are very concerned about the impact of proposed changes to the international tax regime by the Organisation for Economic Co-operation and Development (OECD), a survey suggests.
The survey was carried out by consultants Ernst & Young at an event attended by more than 100 multinationals and large indigenous public and private organisations.
The OECD’s so-called base erosion and profit shifting (BEPS) project is focused on closing corporate tax loopholes around the world, with the ‘Double Irish’ also on its radar.
But concerns have also been expressed about aspects of the BEPS project amid suggestions it could have an adverse affect on smaller countries like Ireland.
The EY event was attended by senior management, including chief financial officers, board members and others with responsibility for taxes in their organisation.
“There was a wide consensus in the room that the cost of compliance will increase for business from these changes,” an EY spokeswoman said.
The study found that 43pc of companies are very concerned about the potential changes from the BEPS project, while 15pc describe themselves as extremely worried. Forty-five per cent said they were very concerned about the country-by-country reporting procedures, and 12pc extremely so.
The concerns include the pace of the potential change and the risk of unilateral actions, as well as increased compliance costs.
The think-tank has been asked by the G20 finance ministers to examine proposals to combat global tax evasion.
Chartered Accountants Ireland has already expressed concern about another aspect of the plans around taxing high-tech multinationals, stating that smaller countries could be adversely affected.
The OECD has published a draft discussion on companies operating in the digital economy.
Proposals include redefining when and where a company is liable for tax. For example, it suggested a company would have a presence in a country even if it only had a “significant digital presence”.
Chartered Accountants Ireland said this would mean that if a company collected data in a country but had no physical presence there, the fact that it was collecting data would be a sufficient reason to impose tax.
E&Y said it will be some time before the specific impact of the BEPS project will be known for businesses involved in the digital economy.