ey-global-tax-policy-outlook-for-2015

more tax transparency and to try and
move multinational companies away
from aggressive tax planning techniques.
It’s going to be a particularly useful
Action for tax administrations who will
want to add that “micro” information
to the new “macro” data that is now
becoming available to them. But at
its heart, it’s trying to change the
underlying behavior of some companies.
I think this will be a quick win for
Impact of unilateral actions
I think it’s pretty clear that the United
at the same time, it shouldn’t be that
surprising because this is a measure
that is designed to change the behavior
to implement unilaterally. Again, it’s a
development where there are a lot of
open questions on implementation, and
it takes a lot of judgment on the part of
the tax auditors. It has the capacity to
give rise to a lot of dispute. The United
Kingdom sees this tax as incentivizing
MNCs to be less aggressive and to have
a much more cooperative approach
with HMRC. The key question is whether
other countries will follow the United
Kingdom’s lead. Here, I think the answer
is “quite probably, yes.”
We’ve already seen interest on the
part of Australia, and I wouldn’t be
surprised if other countries also pick
it up. It’s another case of countries
pre-empting the outcomes of the BEPS
Project. The second aspect is that
some countries might argue that if the
generalizes it, it might provide an indirect
solution to some of the PE challenges.
I think that’s unlikely to happen, as there
are too many countries that now have a
vested interest in cracking the PE issue,
particularly where it applies to fully
digital companies.
More widely, the adoption of unilateral
and says that there is a solution to a
particular tax issue is going to be under
immediate pressure to adopt such a
measure, even if it’s only a temporary
stop-gap. But, it’s in the interest of global
trade to try to keep unilateral actions to
a minimum. First, it creates uncertainty
for business. Second, it makes it harder
to actually gain consensus on the major
issues. And third, it creates a lack of
consistency in the way these measures
are implemented.
Gaining consensus
Many of the actions that are under
consideration in 2015 will require a
change to national legislation. It will be
challenging to gain consensus on such
actions, so CFC legislation, for example,
will be a challenge in 2015. Traditionally,
has not made recommendations to
governments on what domestic tax
legislation should be in place. So this is a
new and challenging area. And of course,
everything around the PE concept is still
on as the project moves forward. It’s
going to be important that business
monitors these two Actions because of
the fundamental difference in approach
of some of the BRICS nations and the
Timing
Clearly, the ultimate goal will be to have
and not just the recommendations, but
also the implementation guidance — by
the third quarter of 2015, under the
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but no date has yet been set for the
Summit, which will be towards the end
of 2015. It will be important to have
the leaders at the Summit. It has been
my experience that there will be many
implementation issues to be resolved
after the Summit.
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16 | The outlook for global tax policy in 2015