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A key area of focus in corporate tax is transfer pricing, which has been greatly impacted by the introduction of the Organisation for Economic Co-operation and Development’s (OECD’s) base erosion and profit shifting (BEPS) initiative. Though it has led to changes which limit profit shifting, critics, including many tax authorities, believe BEPS does not adequately address the challenges of the digital economy.

To that end, the OECD recently proposed the BEPS 2.0 initiative, designed to harmonise the principles of taxation. The projected impact of BEPS 2.0 will be significant, with global tax revenue expected to grow by 4 percent, indicating that economies with the highest direct investments will be impacted most. There are concerns, however, that BEPS 2.0 may increase the number of disputes in the corporate tax space due to its complexity and the inconsistent manner in which it may be implemented by authorities around the world.

BEPS is far from the only disruptive event to impact the tax landscape recently. The coronavirus (COVID-19) pandemic has created uncertainty for all companies, and, as a result, it is critically important for them to evaluate their performance in various markets and understand the impact on current transfer pricing policies. In an already complex tax landscape, the pandemic and its associated economic and financial pressures have further muddied the waters.

COVID-19 has also had an impact on the rollout of the BEPS 2.0 initiative. An Inclusive Framework was expected to be agreed by the end of 2020, but key political and technical issues are yet to be resolved.

Against this backdrop, Financier Worldwide turns to some of the leading lights in their field, who share their stories…

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