The Implementation of BEPS
2016 saw the start of the implementation phase of BEPS, which has seen the introduction of, public disclosure of tax information, governance and tax reporting, transfer pricing methodology and documentation and the limiting of interest deductions. These changes have resulted in a large shift in the processes many tax teams follow, in particular when it comes to compliance and reporting. For tax leaders, this has created the added pressure of keeping ahead of changes in order to provide practical advice to their businesses, ensuring they remain compliant and efficient during this period of transition.
The introduction of the BEPS changes meant that throughout 2016, and the start of 2017, we also saw an increase in tax disputes between authorities and businesses. This is largely due to the authorities taking a stronger stance ahead of BEPS related law changes that are starting to come into effect. The growth of the digital economy and the uncertainty that surrounds its taxation, with many European countries looking to introduce new digital taxing concepts, also played a factor in this increase in tax disputes.
Looking forward to the remainder of 2017 we are expecting to see the further implementation of BEPS rolled out across all European countries. This should lead to more certainty within the tax market, as we learn of each countries approach to these new changes. Up until now, BEPS has largely resulted in an increase in tax audits for high profile corporations, looking further ahead we are expecting to see an increase in tax auditing occurring across the board, with smaller companies also being targeted.