With the 31 December BEPS Action 13 deadline looming, a Thomson Reuters survey of 135 corporate executives and tax and transfer pricing executives found 90 per cent are reporting difficulties keeping up with new BEPS developments.
About 63 per cent of respondents are still in the process of making changes or updates to their operations based on BEPS recommendations, the survey found.
A further 27 per cent cited Action 13, which is transfer pricing documentation and country-by-country reporting, as the action item most relevant or concerning to their business, followed closely by Actions 7 and 8, which are the permanent establishment (PE) status and transfer pricing (intangibles) respectively.
This research comes as mid-tier firms in particular have stressed the difficulties businesses are finding in keeping activities, and consequently profits, in Australia.
Recently, RSM director and national head of tax, Rami Brass, told Accountants Daily that Australia’s “unnecessarily complex” tax laws are increasingly pushing clients to consider taking their operations offshore. In particular, the “monumental” BEPS process has been a burden for business.
This is compounded by Australia’s relatively high corporate tax rate, which firms like BDO believe creates an incentive for businesses to look to Asian neighbours like Singapore, where the corporate tax rate is 17 per cent.
A recent BDO paper also found that the slashing of corporate tax rates in the US by president Donald Trump may increase competition among other jurisdictions in the Asia Pacific region, leaving Australia even further behind its closest neighbours.
“The US reforms have the potential to accelerate tax competition between jurisdictions, making Australia’s current corporate tax rate increasingly uncompetitive internationally,” stated the report.
“While the US would experience higher GDP and real wages, other countries, including Australia, could experience a permanent reduction in the level of GDP and real wages unless they take steps to maintain their competitiveness.”
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