BEPS Will Raise Taxes and Cost Worldwide

June 7, 2016 International Tax Cooperation

CHICAGO – Mid-sized international businesses around the world are afraid that upcoming international tax rules will hike their taxes, increase complaince costs, and interfere with their business strategies.

In a report released over the weekend, the international management consultancy firm RSM showed that a significant portion of mid-sized international businesses expect to see greater compliance and tax costs as a result of the international Base Erosion and Profit Shifting rules (BEPS).

The new rules are a G20 and OECD initiative originally aimed at cutting down opportunities for large multinational firms to evade taxes by implementing new measures like stricter reporting requirements, increased scrutiny of transfer pricing practices, and changes to bilateral tax treaties.

In its new report RSM showed the results of a survey of 500 companies around the world, which indicated that 72 percent of all respondents believed that they would see “some” increases to their tax obligations due to BEPS, while 31 percent believed that the increase could be higher than 10 percent.

In addition to the increase in tax obligations, 91.7 percent of businesses believed that they would see increase in their own compliance cost, with some even believing that they would be forced to undergo an update of their corporate structure.

Aside from the financial costs, 70.9 percent of the respondents added that the BEPS rules is introducing some level of uncertainty to their business strategy.

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