In an increasingly connected global environment, national tax laws have not kept pace with the way that multinational corporations operate, particularly given the rise of the digital economy. This has led to inconsistency in the way that transactions are treated by different territories and a perception by many that the fairness and integrity of the international tax system is in jeopardy.
The completion of the OECD's Base Erosion and Profit Shifting (BEPS) project in October 2015 heralds the most comprehensive reform of international taxation ever. Forthcoming changes, including those resulting from the BEPS project, will have huge implications for multinational companies that go far beyond the confines of the tax department.
These changes are likely to impact the way companies operate, the way they grow their business and the extent to which their tax and financial affairs need to be disclosed. Although some of the detailed rules are yet to be finalised, the direction of the main proposals is becoming increasingly clear so that work can be done now to understand the elements of your company's tax structure and operating models that are most susceptible to the areas being focussed on by the various BEPS work streams.