OECD - After-tax hedging may threaten tax revenue 

March 14: The Organisation for Economic Co-operation and Development (OECD) today issued a report concerning the threat to countries' revenue base caused by “aggressive tax planning” based on after-tax hedging.

The OECD report [PDF 1.86 MB] - Aggressive Tax Planning Based on After-Tax Hedging - describes features of aggressive tax planning based on after-tax hedging, as well as the strategies used to detect and respond to such planning. The OECD report further highlights a number of challenges from a compliance and policy perspective.

According to the OECD report, not all after-tax hedging arrangements are aggressive, and after-tax hedging in and of itself is not an issue. An overall recommendation is that countries adopt a balanced approach in their response to after-tax hedging.

According to a related OECD release, a number of countries have encountered aggressive tax planning by taxpayers using after-tax hedging to achieve higher returns, without actually bearing the associated risk, which is in effect passed on to the government. The release states that any country that taxes the results of a hedging instrument differently from the results of the hedged transaction / risk is potentially exposed to such planning.

©2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International.

KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.

The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

Share this

Share this


Current and future KPMG clients may subscribe to TaxNewsFlash email alerts.

Email your contact information.

TaxNewsFlash-United States by year