BEPS and hybrid mismatches – a project plan

As the BEPS report arrival comes closer, what should taxpayers be seeking in terms of process from the OECD and governments?

The key issue for taxpayers in a time of change is to be able to be clear about what are the intentions of proposals. If we are clear about intentions, we can adjust our behaviour and plan for a changed environment.

In terms of hybrid mismatches what would this involve?

The Beps project should indicate which types of hybrid will not be acceptable going forward. This can be a combination of a list of specific hybrids and more general policy statements (which is one of the approaches the EC appears to be using in its recommendation on Aggressive Tax Planning – C(2012) 8806 final). Such an approach would combine the specific and the general, so that governments do not have to draw up a comprehensive list in short order.

A statement of intent would be helpful in the sense that actually changing the law may take some time and if taxpayers are clear about intent they can prepare and implement changes, for governments this process would warn taxpayers of change so there could be no claim of lack of warning. Such a process can also help consultation on the changes involved.

A timetable of proposed changes would also make sense in terms of helping taxpayers to prioritise behaviour changes.

In summary, what we need is a transparent, public project plan containing both policy statements and specific measures.

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