The OECD's proposed review of international tax laws are likely to affect the daily activities of corporate treasuries, including liquidity management, foreign exchange, cash management and intercompany financing.

Under the rules proposed by the Base erosion and profit shifting (Beps) project, governments will be able to close some of the global tax loopholes that enable corporations to divert profits from one jurisdiction to another that has a lower or no-tax environment, even if the company does not have any significant economic activity in the tax haven.

Corporate treasury, along with the company's legal and tax experts, would be required to show that their company subsidiaries are not set up for the purpose of creating “tax efficiencies”.

Beps would also affect how companies manage cash and liquidity, particularly through their use of cash pooling and cash concentration structures. It will be harder to get cash from all subsidiaries into one account or 'pool', which will also make it more difficult to hedge a particular FX position for the whole group. Treasurers may be required to provide additional documentation to demonstrate that certain centralised cash and FX risk management strategies are necessary and subject to transparent transfer-pricing principles.

More documentation may also be required for other intercompany payments.

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CTMFile take: Companies may well not like the sound of the OECD's proposed tax rules and for many the medicine may taste bitter but there is growing consensus that fairer and more transparent international corporate tax rules are needed. Most corporate treasurers will be fully backing the principle behind the Beps initiative, despite the disruption to daily cash management.