With the increasing globalization and complexity of intercompany flows, the national laws have not kept pace with their changing tax environment. Indeed, the fluid capital and the growing importance of digital economy create new opportunities for multinational enterprises to avoid taxation in their domestic countries by shifting their activities and (intangible) assets to low or no tax jurisdictions, undermining the fairness and integrity of tax law provisions.
By launching its Base Erosion and Profit Shifting (“BEPS”) action plan in July 2013, the OECD has been looking to tackle those issues. The action plan consists of 15 specific actions providing international guidance to address BEPS. The main objective of the action plan is to develop a new set of standards namely to prevent double non-taxation, to ensure the consistency of the international tax system and tax transparency. In October 2015, the OECD released its final reports related to those 15 specific actions.
Governments are now making changes to their tax legislations in order to be aligned with the new recommendations and regulations. Belgium has recently implemented the BEPS action 13 on country-by-country reporting and transfer pricing documentation. Qualifying subsidiaries and permanent establishments in Belgium will have to file specific forms and documentation with the Belgian tax authorities as from now on. Moreover, the Belgian tax authorities will continue to focus on transfer pricing audits hereby already implementing the new insights of the BEPS reports.
The latest KPMG's reports of transfer pricing developments from across the globe can be found via the following link: TaxNewsFlash-Transfer Pricing