Global survey finds little impact on business from OECD BEPS

The biggest concern? The administrative burden

MILAN – A global survey of 2,600 businesses in 36 countries finds little impact from the OECD BEPS programme which was finalised last October.

In Italy, 72% of businesses say they have not changed their businesses approach to taxation, while only 14% of businesses have taken measures in line with the OECD programme.

As part of the BEPS plan, businesses are being asked to provide corporate tax information to local and international authorities and the greatest concerns for Italian businesses is  the additional administrative burden it creates (18%), followed by cyber security concerns (4%) and by the fear that information could become public. 2% of Italian businesses is worried about a misinterpretation of information and 2% is concerned about the threat of a tax assessment.   

It must be pointed out that 70% of Italian businesses answered with “Don’t know”, thus implicitly confirming that the majority of businesses is unaware of the changes that the introduction of BEPS will imply.

It is interesting to note the data emerging from the question “Would your business prefer to be taxed on its profits or rather pay a tax on its transactions (transactions may include, for example, restructuring in your organisation, acquisition of new entities or products and the purchase of goods and services)? 60% of businesses answered “on profits”, while only 14% said “on transactions”.

“These data are really curious”, comments Paolo Besio, International Tax Partner at Bernoni Grant Thornton, “as they show that few businesses have taken significant measures to change their tax policy. The BEPS project has been welcomed with great concern by the business community, in the light of the line adopted by OECD and by tax authorities as regards different issues. Recent news have increased the concerns as regards objections to practices adopted in past years, which are no longer practicable. In this context, the fact that 78% of surveyed businesses declared that they have not changed their businesses approach to taxation and that they are concerned about additional administrative burden and data protection provided cannot be easily explained.

There could be many reasons for this: Many businesses choose to wait in order to understand the line that the single countries will adopt, the practices that will become more common, but also to avoid taking risks before others. This behavior is justifiable, but it risks to compromise their position in the medium term. I deem it appropriate that businesses analyse their structure now, in order to ensure it is in line with BEPS, or otherwise make the necessary changes in the short term. More specifications on what should be done are needed. In this uncertain context, the recent EU action towards Apple and its agreements with Ireland increases concerns for the future and risks to bring mistrust in cooperative compliance practices, which Governments and Tax Authorities are investing in."

Global situation

78% of businesses say they have not changed their businesses approach to taxation, despite more than 80 countries having agreed to adopt at least the minimum elements of the BEPS Action Plan.

Also at a global level, the main concerns are the additional administrative burden and the cyber security of information shared with local and foreign Governments.

The lack of impact is even greater in the G7 (83%), with 89% of US businesses and 86% of UK businesses saying that BEPS has had little impact on their tax planning.  According to the businesses surveyed, BEPS has had the greatest impact on business tax planning in the countries of Indonesia (35%), Nigeria (38%) and India (36%).