NEW YORK, Nov. 9, 2015 /PRNewswire/ -- Business executives cited an increased compliance burden as their biggest concern with the Organization for Economic Cooperation and Development's Base Erosion and Profit Shifting initiative (37.7 percent), according to an October Deloitte poll. Other concerns included double taxation of income (17 percent) and an increased effective tax rate in income from cross-border transactions (14.9 percent).
"The tax law changes resulting from the OECD's work will introduce a host of new issues and challenges for companies in the United States," said Tom Driscoll, U.S. managing partner for international tax, transfer pricing, and indirect tax, Deloitte Tax LLP. "To identify and address areas of concern, businesses should analyze the impact of the proposals to evaluate business model and treasury impacts, as well as develop compliance strategies when vulnerabilities are identified."
The OECD released its final BEPS package in October, which includes and consolidates the first seven reports presented last fall and includes all 15 Actions of the BEPS project. Of the Actions presented, Deloitte's poll found that country-by-country reporting topped the list of priorities for organizations (30.6 percent). The cost of compliance is also a significant concern for respondents in regard to country-by-country reporting (26.8 percent).
Congressional action in response to the BEPS project is uncertain, and similarly, respondents were split on the impact the BEPS project will have on U.S. tax reform. One-third said the BEPS project strongly impacts and emphasizes the need for comprehensive business tax reform, while one-quarter said it has not impacted the debate enough to make the case for tax reform.
"While the U.S. has yet to enact BEPS-related legislation, businesses should be aware that the changes from BEPS that will have the biggest impact on U.S. businesses are going to come from outside our borders," said Jon Traub, managing principal, tax policy, Deloitte Tax LLP. "However, the final reports, and subsequent actions by other nations, may motivate congressional action of some sort on international tax issues in the future."
Additionally, the IRS has indicated that it anticipates new transfer pricing audits on U.S. companies' compliance and tax planning procedures, in light of the final BEPS guidelines. In a separate Deloitte poll last month, more than one-fifth of respondents said their transfer pricing team has spent less than 20 hours this year on the business implications of transfer pricing (21.9 percent), while only 6.9 percent of respondents cited more than 100 hours have been spent in this area. Additionally, more than one-third of respondents have not spoken to their company's senior management or board about how transfer pricing changes will impact their company (36.5 percent).
About the Surveys
Deloitte hosted two webcasts in October, where accounting, tax and finance professionals responded to poll questions about the Organization for Economic Cooperation and Development's Base Erosion and Profit Shifting package. There were more than 1,100 respondents to Deloitte's Oct. 9, 2015 webcast, titled "BEPS update: Release of the final package," and more than 1,800 respondents to Deloitte's Oct. 27, 2015 webcast, titled "OECD transfer pricing guidelines: After crossing the finish line, what's next?" Respondents work in a range of sectors including banking and securities, consumer products, government and technology, among others.
About Deloitte Tax LLP
Deloitte Tax helps clients lead the transformation of the tax function into a strategic partner that supports growth and sustained profitability within an organization. With deep experience across a broad range of services and industries, Deloitte Tax has more than 10,000 trusted advisors who combine their knowledge of tax technical resources and technology to uncover insights and smarter solutions for clients in today's complex global and regulatory environment. For more information visit www.deloitte.com/us/tax. Join us on twitter @DeloitteTax.
About Deloitte
Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the world's most admired brands, including 80 percent of the Fortune 500. Our people work across more than 20 industry sectors to deliver measurable and lasting results that help reinforce public trust in our capital markets, inspire clients to make their most challenging business decisions with confidence, and help lead the way toward a stronger economy and a healthy society.
As used in this document, "Deloitte" means Deloitte Tax LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.
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