Many governmentsare legislating nowrather than awaitingfinal OECD BEPS recommendations
According to Peter Willey, EY’s Channel Islands Head of Tax, the Channel Islands are likely to be impacted by decisions being made now in other jurisdictions.
EY recently surveyed its tax policy leaders in 32 jurisdictions to ask them to forecast the tax policy outlook for 2015 in their jurisdiction. The results indicate that many countries are pressing ahead and legislating now, rather than waiting for final recommendations from the Organisation for Economic Co-operation and Development (OECD) on its Base Erosion and Profit Shifting (BEPS) Project.
BEPS expectation dictates tax reform
Last year saw unprecedented change in the cross-border tax landscape, owing in large part to G20 and OECD deliverables for new global taxation measures from September 2014.
The report points to striking national policy shifts, with 40% of respondents citing“significant” tax reform activity, even while final BEPS recommendations are still pending.Significantly, 34% have enacted legislation (or are planning to do so) in 2015 to tackle hybrid mismatch arrangements.
Rising tax burden and enforcement measures
Country data also show that the trend toward broad-base, low-rate business tax regimes continues to prevail. Conversely, however, nearly a third of respondents (31%) expect the overall corporate income tax burden in their countries to increase in 2015. This further supports OECD data that show total tax revenues are rising throughout the world.The report also highlights how governments are already launching new transparency requirements such as country-by-country reporting, with 10 countries (31%) reporting increases in tax enforcement measures for the year ahead.
Taxation central to government affairs
Taxation is increasingly becoming a pivotal determinant in election campaigns, and with 10 of the 32 (31%) countries planning national or presidential elections in 2015, businesses must prepare now for possible changes in national tax policies.
Falling oil prices and currency fluctuations also are identified as key drivers for national policy revision in what is likely to be an eventful year ahead.
Mr Willey said:“The uncertainty generated by governments acting in advance of final OECD recommendations means that it is difficult to predict the exact impact on the Channel Islands but it is likely that businesses will have to continue to adapt to a changing global tax landscape.”
