Skip to main content Skip to navigation
Carson College of Business Hoops Tax Forum

THE OECD BASE EROSION AND PROFIT SHIFTING (BEPS) PROJECT:

ENSURING TAX RESPONSIBILITY BY MULTINATIONAL COMPANIES

The Panel Discussion can be viewed in its entirety here!

Click the video Thumbnail to view each specific part of the Presentation/Panel Question Responses

Video TOPIC SPEAKER
Introduction

Prof. Gramlich
Background and magnitude of the problems that gave rise to the OECD’s Base Erosion and Profit Shifting (BEPS) Project Prof. Clausing
BEPS Action Steps 2 & 3

  • Step 2 – Neutralize the effect of hybrid mismatch arrangements
  • Step 3 – Strengthen the CFC rules
Prof. Avi-Yonah
BEPS Action Steps 12 & 13 – Increasing information flow from a taxpayer to a tax administrator

  • Step 12 – Mandatory disclosure rules
  • Step 13 – Country-by-country reporting: Challenges and concerns
Prof. Robinson
Thoughts on the base erosion and profit shifting problem, and whether the OECD project was needed Dr. Faiferlick
Video Question Speaker
Some authors have argued that the BEPS project was essentially forced onto the OECD by the U.S. because of the high statutory U.S. tax rate, the relatively lower effective U.S. tax rate, and its own government dysfunction. To what extent do you agree with this view? Please comment. Prof. Clausing / Dr. Faiferlick
Professor Clausing’s recent 2016 working paper estimates that the U.S. government was losing between $77 and $111 billion annually by 2012, $280 billion for governments around the world, and the paper argues that that number is likely to have increased since then. Will the BEPS agreement help the U.S. start to collect some of this lost tax revenue? If so, what aspect of the BEPS will help most? Prof. Avi-Yonah
Do you have any additional thoughts on whether it is likely that BEPS will help the U.S. gain some the lost revenue? Prof. Clausing
What do we mean by “deferral” when it comes to U.S. multinational companies? What other options are possible? Prof. Clausing
Do you believe BEPS has already had an impact on firm behavior? And if so, how? Dr. Faiferlick
How does the ratification process for BEPS work? We know that representatives of 31 OECD countries signed the BEPS treaty in January 2016. According to Action 15, the agreement only becomes effective upon a country when that country ratifies it.

  • What is the likelihood that a majority of the 31 countries will ratify BEPS, and when?
  • What is the likelihood that the U.S. will ratify BEPS? If so, when?
Dr. Faiferlick / Prof. Avi-Yonah
Under BEPS firms would be required to provide reports that include basic income and tax information on a by-country basis. This information would be shared among the signatory countries. In March 2016, however, the European Commission issued a draft proposal that would require large firms, those with total consolidated revenue of $750 million or more, to publicly disclose information about business activities. In response, the U.S. Treasury Department said it will not share its CbC reports with signatory countries that release this information to the public. What do you make of this? Dr. Faiferlick /Prof. Clausing /Prof. Avi-Yonah
What is the value of country-by-country reporting? Toward a formulary-based profit-split method. Prof. Avi-Yonah
How will BEPS affect transfer pricing APAs going forward? Will there be an increase in APAs (advance pricing agreements) as a result of having BEPS? Dr. Faiferlick
Currently, there are a number of countries to which corporations transfer profits. If only one or two of these low-tax countries say, “we don’t want to play the game,” is that going to mess the whole thing up? Prof. Robinson
Is there anything that we can salvage out of BEPS if we don’t have a couple of countries that are key to it? Dr. Faiferlick
What real changes do you think will come out of the BEPS agreement within the next year but, more important, over the next five to ten years? Prof. Clausing / Prof. Avi-Yonah
How is corporate social responsibility playing a role with BEPS in corporate board rooms? Dr. Faiferlick
One concern is the possibility of overloading government tax administrators with excess information. Prof. Robinson
Credits to event speakers and sponsors
Washington State University