NEW YORK, July 5, 2016 - Two-thirds of corporate tax executives surveyed say their companies are proactively preparing for the onslaught of new tax regulations resulting from the Base Erosion and Profit Shifting (BEPS) Action Plan.
That`s a 22% increase in the past year. In Thomson Reuters 2015 BEPS Readiness Survey, 54% of respondents said they were actively preparing for the new reporting requirements. This year, it`s 66%.
The new survey found European companies are more intensely focused on BEPS planning than their peers around the world. Three-fourths of respondents from companies based in Europe said they are proactively preparing for BEPS, up from 59% last year. In the U.K., it`s 80%. That compares with 71% in Latin America, 64% in the U.S., and 40% in Asia Pacific.
The disparity may reflect the varied pace at which countries in each region are implementing BEPS regulations.
The Organisation for Economic Cooperation and Development (OECD) developed the BEPS Action Plan, at the request of the G20 countries, to help nations align their corporate tax policies.
"Preparation for BEPS compliance is a daunting operational burden on multinational companies as they work to keep up with the growing list of new and changing global regulations," said Brian Peccarelli, president of the Tax & Accounting business of Thomson Reuters. "While it is encouraging to see that more companies are preparing for BEPS, many corporations are still not doing enough to prepare for the compliance risks ahead."
In 2015, The OECD issued 15 Action Items to address areas such as the digital economy, treaty abuse, and transfer pricing documentation. Most survey respondents (83%) said documentation and country-by-country reporting for transfer pricing, related to BEPS Action Item 13, has required the biggest operational changes. This is consistent with last year`s findings. Across all countries, audit exposure is cited as the biggest issue related to Action 13 compliance.
The research also found significant regional variance in the time tax departments are investing in BEPS preparation. Respondents from the U.K. are spending the most time on BEPS preparation, with 28% saying their departments invest more than 15 hours per week on the project. The U.S. lags behind, with 50% of respondents saying their departments spend fewer than two hours per week preparing.
Respondents also report making changes to their business operations as a result of BEPS. Over half have changed their transfer pricing policies and conducted a review of their business`s value chain and key profit drivers.
The second annual BEPS Readiness Report, accessible at https://tax.thomsonreuters.com/BEPS/survey-report-2016/, provides a full picture of the BEPS-related operational and technological readiness issues affecting multinational corporations.
Thomson Reuters delivers tax technology and information solutions to leading global companies. It conducted the survey in association with Euromoney from March to April 2016, garnering responses from 207 corporate tax professionals from over two dozen countries.
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Source: Thomson Reuters Corporation via GlobeNewswire