Corporate international tax
Domestic and international tax legislation is constantly evolving. We see more countries addressing and implementing international corporate tax reforms, including BEPS, initiated by the OECD, and the EU’s Anti-Tax Avoidance Directive (ATAD). In addition, a number of developments are emerging aimed at tackling the challenges that the digital economy creates for the international tax system.
Taxation of the digital economy and pushing fiscal boundaries
There is a widespread - but not yet universal - view that the international tax system needs reform in order to address the digitalisation of the global economy. 2018 and 2019 have seen both the OECD and the EU publish papers on this subject, and the OECD has now, in October 2019, released its proposals on allocating profit to different countries in which an international company makes sales or derives value. The Unified Proposal would give countries the right to tax profits of international businesses (regardless of whether they have a base in the country or not) based on calculating up to three separate pots of profit. The proposal goes beyond the arms-length principle in certain respects with a greater attribution of profit to market (i.e. customer) jurisdictions. Meanwhile, in the absence of consensus and in recognition of the time that it is likely to take to agree on a workable global framework, many countries have pressed ahead and announced unilateral measures to implement their version of how the digital economy should be taxed. It will come as no surprise that these measures take a range of forms and, even where they align in concept - for example, a digital services tax - the base for taxation can differ significantly. The inconsistency of unilateral measures simply increases the complexity for businesses who seek to comply with the rules and increases the overall tax burden.
There is much work to be done and the OECD sees its role as presenting a clear way forward in 2019 with agreement by countries to a long-term global solution to take effect globally from one agreed date.
BDO is undertaking new research worldwide on Digital Services Taxation and its impact on businesses across jurisdictions. If you are interested in learning more sign up here.
When your business expands beyond your home country’s borders, tax matters become even more complicated. That’s why it’s important that your advisors are knowledgeable and experienced in every jurisdiction you do business in. BDO’s tax professionals in 162 countries and territories have experience managing the most complex tax challenges across a wide variety of industries and across international borders. We bring our collective knowledge to all engagements, and offer a range of services aimed at helping you:
- Comply with tax laws world-wide
- Manage the taxes your businesses pay globally and your tax risk
- Structure your investments in other countries tax effectively
- Implement tax effective repatriation strategies
- Build practical solutions that support the way your business operates
- Ensure your tax planning withstands scrutiny by the tax authorities.
View our latest international tax publications in the Related Insights below, including our International Tax Services brochure.
To talk to your local BDO corporate international tax expert, please visit the BDO web site for your country.