Base Erosion Profit Sharing (BEPS)

As the global landscape for taxation undergoes significant transformations, the Organisation for Economic Co-operation and Development’s (OECD) Inclusive Framework on Base Erosion Profit Shifting (BEPS) has been at the forefront, continuously evolving to address tax avoidance, enhance the coherence of international tax rules, and foster a more transparent tax environment.

BEPS 2.0, a pivotal aspect of this evolution, is now extending its scope to tackle challenges arising from the taxation of the digital economy.

The ongoing project, known as BEPS 2.0, comprises two key components:

• Pillar One focuses on new nexus and profit allocation rules, aiming to allocate a larger portion of taxing rights over global business income to market countries.
• Pillar Two encompasses rules for a new global minimum tax, endorsed in December 2021 by 141 jurisdictions participating in the BEPS 2.0 project.

At this juncture, multinational enterprises (MNEs) are navigating the complexities of implementing global minimum taxes. As organizations embark on their BEPS 2.0 compliance journey, they face the task of recalibrating internal processes, restructuring operations, and ensuring accurate calculations for new tax obligations. 

It is critical to understand how BEPS 2.0 will affect your organization—both its profit reallocation proposals (known as Pillar One) and its global minimum tax measures (known as Pillar Two). The outcome of these efforts could present you with a new set of pressures, including new demands for internal resources, the need to revamp tax policies, and additional investment requirements for new technology to handle new and greater compliance obligations. 

Here at KPMG, our expert team stands ready to assist organizations in assessing the potential impact of the BEPS 2.0 reform package, accessing the necessary financial data for compliance, and navigating operational adjustments in response to legal changes across diverse jurisdictions. Specifically, we have combined our technology, transformation and compliance capabilities under a new framework — Tax Reimagined. A technology-enabled holistic approach, to help you develop and implement a customized target operating model for your tax and finance functions with an end goal to reduce costs, mitigate risks, improve quality and drive more strategic value across your organization.

Our KPMG’s BEPS Automation Technology covers the end to end Pillar 2 compliance process. The tool will support your needs with modelling, planning and compliance, from data ingestion through to filing of the GloBE Information Return, with insights, oversight, analytics and controls over the process.

Key design principles include:

• Flexible data ingestion from structured data extraction to smart questionnaires
• Modelling, planning, provision & compliance ready
• End to end capability from Safe Harbours, election management to detailed calculations

Contact us to learn more about how KBAT can support your needs.