Interstate Tax Strategies

Changes to Voluntary Disclosure Programs: Will It Better Address the Issues on Base Erosion and Profit Sharing?

OEC’s report shows that they, along with the G-20 countries collaborated and arrived at an approach to enhance an action plan that would better address base erosion and profit shifting behaviors of multinational companies. This was discussed in the conference held with the goal of better enhancing the voluntary disclosure programs that would aid companies whose compliance failures are not willful.


Atlanta, GA -- (SBWIRE) -- 07/21/2014 -- OECD (Organization for Economic Co-Operation and Development ), an international organization providing forum where governments collaborate to share experiences and identify solutions to common problems, with its 34 member countries, has just finalized the 2014 International Tax Conference. In the said conference, John Koskinen, IRS Commissioner, talked about the vital role that international tax compliance and efforts that both IRS and the US government do to fight offshore tax evasion. He proposed a good approach in the modifications that IRS is taking into account to better implement the so-called “voluntary disclosure program” that would aid companies who are not fully aware of the policies that they need to comply yet were forced to close their businesses due to non-compliance.

Base erosion and profit shifting (BEPS), a “tax planning strategies that exploit loopholes in tax rules to make profits disappear for tax purposes or to shift profits to locations where there is little or no real activity but where they are lightly taxed, resulting in little or no overall corporate tax being paid”, is an issue that OECD is focusing on. Their goal is to identify why the existing laws for the distribution of taxable profits to branches different from those where real business activities are taking place. OEC’s report shows that they, along with the G-20 countries collaborated and arrived at an approach to enhance an action plan that would better address base erosion and profit shifting behaviors of multinational companies. To note, most of the strategies being implemented by BEPS are legal.

The topics being discussed during the conference were: transfer pricing and intangibles, country-by-country reporting, digital economy, treaty abuse, hybrids which are arrangements used to achieve unintended double-non-taxation or long term tax deferral, FATCA, and the common standard for automatic exchange of information.

The business community gave their inputs as well on the said issues about BEPS. Business Roundtable, in their letter to Jacob Lew (Treasury Secretary), asserted their view on BEPS project as “ostensibly initiated to address potential gaps in the taxation of cross-border income and improve tax coordination among jurisdictions to prevent the creation of “nowhere income.”” They believe that the BEPS project is being used by some governments to merely oblige extraterritorial taxes on US business income. Although, they did not fail to acknowledge the fact that they respect this right of the government to impose taxes appropriately on earnings gained within given jurisdictions. They pointed out that there is but a big risk of incurring double taxation, direct revenue deficit to the US government, and more drawbacks to US enterprises relative to its foreign competitors. It is important of the US worldwide tax system.

In the said conference, both the US Council for International Business (USCIB) and the Business and Industry Advisory Committee (BIAC), in cooperation with different tax groups, discussed in a series of panels, the possible ways to better improve the OECD tax projects. Different speakers from the business community were featured in the conference.

About Interstate Tax Strategies, P.C
When it comes to Atlanta tax services, Interstate Tax Strategies, P.C. is unique in its exclusive focus on interstate sales and use tax. Ned Lenhart, CPA, is President of Interstate Tax Strategies and has been perfecting his tax consulting skills for over 27 years. Well-versed in sales tax audit procedures, he started Interstate Tax Strategies, P.C. in 2003 after serving as a Firm Director for Deloitte in its Atlanta office. Prior to joining Deloitte in 1994, Ned was a Sr. Manager with Arthur Andersen in Kansas City, Missouri. Ned also worked for the Missouri Department of Revenue where he was the Director of the Compliance Division and led the state's civil and criminal tax enforcement efforts. He also served as Deputy Director of the Division of Taxation and Bureau Manager for the Compliance Division.