UK and International Tax news
OECD Issues Discussion Draft On BEPS Action 3 And CFCs
Tuesday 7th April 2015
The OECD has recently issued a discussion draft on BEPS Action 3 and the strengthening of CFC rules.
Many countries already have CFC rules, but these do not always counter BEPS in a comprehensive manner and whilst they may lead to inclusions in the residence country of the ultimate parent, they also have positive spillover effects in source countries because taxpayers have no or much less of an incentive to shift profits into a third, low tax jurisdiction.
Working Party No. 11 has considered many options for the design of CFC rules that would prevent base erosion and profit shifting. The discussion draft considers all the constituent elements of CFC rules and breaks them down into the building blocks that are necessary for effective CFC rules. Most of these building blocks include draft recommendations. The exception to this is Chapter 5, which deals with the definition of CFC income and which does not include recommendations but instead discusses possible options. The building blocks include:
Definition of a CFC
Definition of control
Definition of CFC income
Rules for computing income
Rules for attributing income
Rules to prevent or eliminate double taxation
The CFA has invited interested parties to send written comments on the consultation document by 1 May 2015. All comments received will be made publicly available and persons and organisations who submit comments may be able speak in support of their comments at a public consultation meeting on Action 3, scheduled to be held in Paris at the OECD Conference Centre on 12 May 2015.Contact Us