How is implementation happening?
2016 has already seen much action to implement BEPS. For example, nearly 50 jurisdictions have already acted to introduce the "minimum standard" country-by-country reporting (CbCR) obligations. CbCRs should allow tax authorities to see much more clearly on a global basis where large multinational companies have activities, report their profits, and pay their taxes, and hence to evaluate more effectively the validity of their transfer pricing and other tax planning.
The EU regards the BEPS conclusions as a central plank in its own action plan, instituted in June 2015, for fair and efficient corporate taxation across the EU. EU Directives are seen by the Commission to be the preferred vehicle for implementing these conclusions.
The EU's Anti Tax Avoidance Directive follows several of the BEPS Project recommendations, dealing with "hybrid" mismatches between individual country tax treatments of entities and financing instruments, controlled foreign companies, and base erosion through interest expenses. It also imposes a common general anti-avoidance rule (GAAR). This Directive is now largely final, with text being adopted at the EU Council in July 2016. Further proposals for extra tightening of the measures on "hybrids" then came out in October 2016. Member States must now legislate the Directive's measures, mainly to be effective no later than 1 January 2019. The fact that the text of a wide-ranging Directive was agreed unanimously by the 28 EU Member States, in less than six months, shows how strong and uniform the political will for action on tax avoidance has been within the EU during the last three years. The corporate world cannot ignore this.
Other BEPS measures require double tax treaties to be amended. In particular, new rules that counter tax treaty shopping - a key "minimum standard" of the BEPS Project - need treaty change before they can apply.
As foreseen under the BEPS Project, the OECD is has co-ordinating work by over 90 countries (including the US) to agree the text of a Multilateral Instrument to amend the existing network of bilateral treaties between its signatories, and notably to adopt the new OECD model text on treaty shopping. The text was released publicly at the end of November 2016, and G20 countries have committed to sign it in the first half of 2017. A major signing ceremony is planned to take place in Paris next June.