• Home
  •  
    News
    • People moves
    • Africa
    • Asia
    • Australia
    • Canada
    • Caribbean
    • Domicile
    • Europe
    • Latin America
    • Middle East
    • North America
    • US
    • US
    • UK
  •  
    Products
    • Funds
    • Pensions
    • Platforms
    • Insurance
    • Investments
    • Private Banking
    • Citizenship
    • Mortgages
    • Taxation
  • Fintech
  • Regulation
  • Special Reports
  • Video
  • Directory
  • Events
  • Advertise with us
  • Newsletters
  • Follow us
    • RSS
    • Twitter
    • LinkedIn
    • Newsletters
  • Advertise with us
  • Events
International Investment
International Investment

Sponsored by

Sharing Alpha
  • Home
  • News
  • Products
  • Fintech
  • Regulation
  • Special Reports
  • Video
  • Directory
  • Taxation

BEPS regime poses 'collateral damage' threat to AM industry - conference hears

  • Jonathan Boyd
  • Jonathan Boyd
  • @https://twitter.com/jonathanboyd
  • 24 May 2017
  • Tweet  
  • Facebook  
  • LinkedIn  
  • Google plus  
  • Send to  

Tax experts taking part in a panel discussion at the recent Guernsey Funds Forum in London warned that the asset management industry could end up becoming the victim of ‘collateral damage’ as the proposed Base Erosion and Profit Shifting (BEPS) regime is implemented.

The Funds Forum saw such tax authorities as Tony Mancini of KPMG Channel Islands and Abhijay Jain of PwC’s Deals Tax Team stressing the need to keep a close eye on the BEPS negotiations.

Related articles

  • IoM, Jersey and Guernsey among new BEPS agreement signees
  • Offshore centres brace for the impact of substance legislation
  • Now EU calls for corp tax data disclosure
  • Isle of Man approves law to avoid EU blacklist

While the BEPS regime was not designed to target the asset management industry specifically, they noted that the question remains as to what degree the industry may be capable of getting an exemption from the rules.

BEPS has been defined by the Organisation for Economic Cooperation & Development, which is overseeing its introduction on behalf of the G20 group of nations,  as “tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low- or no-tax locations”.

The organsiation is therefore  seeking to determine rules that would apply to minimise BEPS arrangements by companies. It adds that under the proposed framework, “over 100 countries and jurisdictions are collaborating to implement the BEPS measures and tackle BEPS.”

The danger, according to the tax experts,  is that those involved in formulating the rules do not recognise how the asset management industry works, and what makes it different from companies operating in other industries.

For example, Mancini noted that the term “substance”, as used in the proposals, could be misapplied to funds as well as “commercial business”.

Jain outlined an example whereby “What this substance argument is doing is providing ammunition to local countries and local governments and local tax authorities to say, ‘you know what, I’m going to ignore all of that and I’m going to penalise you’.

“So, if you are doing investment into an Italian business, Italy will argue that you have a business of fund management in Italy itself and they will tax you for every dime you make in Italy.”

Another challenge is that the application of the BEPS regime will not be uniform from jurisdiction to jurisdiction.

Guernsey joined Jersey, the Isle of Man and other jurisdictions in signing up to the OECD’s Multilateral Competent Authority Agreement in October 2016, which forms part of the organisation’s development of the implementation of its BEPS regime – see: http://www.internationalinvestment.net/other/iom-jersey-guernsey-among-new-beps-signees/.

The European Commission announced in June 2016 (http://europa.eu/rapid/press-release_IP-16-1886_en.htm) that its member states had agreed to implement the BEPSs regime. Pierre Moscovici, the commissioner for Economic and Financial Affairs, Taxation and Customs at the time, said: “Today’s agreement strikes a serious blow against those engaged in corporate tax avoidance.

“For too long, some companies have been able to take advantage of the mismatches between different Member States tax systems to avoid billions of euros in tax. I congratulate our Member States who are now fighting back and working together to make the changes needed to ensure that these companies pay their fair share of tax. I also thank The Netherlands Presidency for their dedication in achieving this deal.”

Moscovici then also referenced the re-launch of the Common Consolidated Corporate Tax Base (CCCTB). That re-launch took place in June 2015, following its original proposal by the EC in 2011, and defined as “a single set of rules that cross-border companies could use to calculate their taxable profits in the EU, instead of having to deal with different national systems.”

It is uncertain how the CCCTB might apply specifically to UK based companies, including asset management companies, doing business across the region once the UK has exited the EU, because negotiations have yet to start in earnest pending the outcome of the UK’s general election on 8 June.

  • Tweet  
  • Facebook  
  • LinkedIn  
  • Google plus  
  • Send to  
  • Topics
  • Taxation
  • UK
  • Base Erosion and Profit Shifting (BEPS)
  • EU
  • European Commission
  • Guernsey
  • OECD
  • Regulation

More From News

Hong Kong's financial sector to gain from new cross-border services: HKMA

  • Banking
  • 19 February 2019
ICBC secures regulatory nod for wealth management subsidiary

  • Wealth management
  • 19 February 2019
More firms turn to Islamic finance for development projects

  • Wealth management
  • 19 February 2019
People Moves: Neuberger Berman, Hargreaves Lansdown, Octopus, Artemis, WisdomTree, Carey Olsen, PGIM, MUFG, Goldman Sachs

  • People Moves
  • 19 February 2019
US investors prefer to pay fees over commissions to advisers

  • Investments
  • 19 February 2019
Back to Top

Most read

Panama outlaws tax evasion, as new blacklisting looms
Deutsche looks again at Middle East after years of cutting costs
DeVere Group acquires UAE-based wealth adviser
Former HSBC global banking head Chow Wan Thonh joins Standard Chartered
Saudi Arabia regrets EU inclusion in dirty-money blacklist as US ignores it
  • Contact Us
  • Marketing solutions
  • About Incisive Media
  • Terms and conditions
  • Privacy and Cookie policy
  • RSS
  • Twitter
  • LinkedIn
  • Newsletters

© Open Door Media Publishing Ltd, New London House, 172 Drury Lane, London WC2B 5QR, registered in England and Wales with company registration number 08584522