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EU member states lead on Beps implementation, EY report

EY’s Outlook for global tax policy in 2016 has found that most countries are moving cautiously in their response to the G20/OECD’s Base Erosion and Profit Shifting (Beps) project, although Europe is setting the precedent for tax reform. The report is based on a survey of EY tax policy professionals in 38 jurisdictions across the globe.

The report found that “Despite the announcement of final Beps regulations in October 2015 and related draft legislation introduced by the European Commission (EC) earlier this year, many countries appear to be waiting for early adopters to set the pace before introducing national tax rules.”

Most countries have not yet begun implementation of most of the 15 Beps recommendations and it's predicted that 34 per cent of jurisdictions will lower the corporate income tax burden in 2016, while 45 per cent project no change at all. Seven of the 38 jurisdictions surveyed have either announced or are forecast to announce falling corporate income tax rates in 2016.

According to Chris Sanger, EY’s global tax policy leader, most of the work on Beps still lies ahead. He said: “Given the sheer number of variables reflected in the final Beps recommendations, and the complexity inherent in coordinating between domestic tax systems globally, there may be significant distance between agreement in the OECD process and national adoption in 2016 and beyond.”

The report found that EU countries are taking a lead on Beps implementation in 2016. Of the 14 jurisdictions either experiencing or forecasting legislative change to address Action 2 requirements (hybrid mismatches), 12 are EU member states.

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