The Organization for Economic Cooperation and Development (OECD) recently completed its final plan on “base erosion and profit shifting,” or BEPS, that aims to overhaul the international rules governing the taxation of company profits.
Henry Birnkrant, partner in Alston & Bird’s Federal & International Tax Group, said the new standards will lead to a “sea change” by requiring multinationals to locate important people functions in the jurisdictions where intangible property is held and providing tax authorities with an easy policing mechanism through the OECD’s country-by-country (CbC) reports, which tax administrations can use to better allocate their audit resources and target their audit enquiries.
He also noted that targeting cash boxes may be “overreach” and may differ from the IRS’s approach. The IRS has indicated in prior guidance that it will apply Section 482 regulations without OECD guidance, leaving questions about whether and how the BEPS recommendations will affect U.S. tax administration.
Henry Birnkrant, partner in Alston & Bird’s Federal & International Tax Group, said the new standards will lead to a “sea change” by requiring multinationals to locate important people functions in the jurisdictions where intangible property is held and providing tax authorities with an easy policing mechanism through the OECD’s country-by-country (CbC) reports, which tax administrations can use to better allocate their audit resources and target their audit enquiries.
He also noted that targeting cash boxes may be “overreach” and may differ from the IRS’s approach. The IRS has indicated in prior guidance that it will apply Section 482 regulations without OECD guidance, leaving questions about whether and how the BEPS recommendations will affect U.S. tax administration.