Getting to grips with Base Erosion and Profit Shifting (BEPS)

share trends 4By AJ Jansen van Nieuwenhuizen, Tax Partner, Grant Thornton Johannesburg

The winds of change blowing through South Africa to expand its tax base and revenues are not unique. Countries around the world are looking for ways to improve their financial situation and their attentions are increasingly focused on company profits. Especially since the low levels of corporate tax which multinationals like Amazon, Apple, Google and Starbucks paid in the past hit world headlines in 2013 and the term Base Erosion and Profit Shifting (BEPS) became commonly used in government and business circles.

BEPS describes tax planning strategies that take advantage of gaps and mismatches in tax rules. These approaches make profits ‘disappear’ for tax purposes or divert income to locations where the prevailing rate of corporate tax is low, but where the company carries out little or no real activity.

Over the past few months, the Organisation for Economic Co-operation and Development (OECD) developed and published a BEPS Action Plan to overhaul the international tax system. The plan has been met by mixed reactions, but if it is adopted, even in an amended form, it will have far-reaching effects on all multi-national corporations, regardless of their size.

Read more about this plan and reaction to it from business and governments around the world.

Grant Thornton launched ‘Getting to grips with the BEPS Action Plan‘, a new report into what the planned overhaul of the international tax system means for businesses and how they can prepare. Download the report. or click here Getting-to-grips-with-the-BEPS-Action-Plan_Low-res