During a panel discussion at the Guernsey Funds Forum in London, tax experts warned that the asset management industry could be harmed by the proposed Base Erosion and Profit Shifting (BEPS) project. The experts warned that the rules ignore how the asset management industry works and that every country has its own version of what BEPS really means.
The Funds Forum hosted several tax experts including Tony Mancini of KPMG Channel Islands and Abhijay Jain of PwC’s Deals Tax Team, who stressed the importance to remain alert as to how negotiations at the OECD unfold. According to the experts, those involved in formulating the rules do not recognize how the asset management industry works, and what makes it different from companies operating in other industries.
The experts also explained that the 'substance' argument 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,” Jain explained.
"If the fund management industry is not careful, it will get subsumed by the much bigger and giant beast that is BEPS. You fall within the big machinery and you get ground down," Jain said.
Transfer Pricing Associates introduces TPA BEPS Desk. If you have any questions, or need more detailed advice on any aspects of BEPS related issues, please get in touch with us. The TPA Global network has alliance partners throughout the world, and the network can provide multi-disciplinary approach on today's critical transfer pricing challenges faced by multinational enterprises.
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