The OECD released the final package of measures for reform of the international tax rules for multinational companies on 5 October. Some 13 reports cover a range of multinational corporation tax issues, including Permanent Establishment, Mandatory Disclosure, Country by Country Reporting, Transfer Pricing and Controlled Foreign Companies. The totality has become known as BEPS – Base Erosion and Profit Shifting.

The BEPS measures can be classified under three headings. Minimum Standards require countries to change their domestic legislation or approach to double taxation agreements and transfer pricing rules as required. Best Practices are strong endorsements of particular approaches to tax law and practice, desirable but not mandatory. Common Approaches fall somewhere in between.

While BEPS sets out to tackle profit shifting, it is also about tax shifting. On a high level initial analysis, many of the BEPS rules won’t alter the amount of tax paid by a multinational, but they will change where the tax is paid. Generally it looks like larger economies will win out over smaller economies. Ireland could benefit from some of the measures, but overall the Foreign Direct Investment package of tax measures will in the future be more difficult to construct and sustain.

Because all the proposals are the outcome of negotiations over a two year period among OECD Member States (including Ireland) along with some other countries, the expectation is that the various proposals under the Minimum Standards classification will be adopted.

We understand that the Country by Country reporting proposal, whereby larger multinationals will have to make comprehensive country by country reports on their activities, will feature in the forthcoming Finance Bill. We also understand that the new Knowledge Development Box promised in last year’s Budget, which is a special tax incentive for companies developing and using high tech methods for new products, will be put into law in a “BEPS compliant” way.

It is possible that the EU Commission will introduce a directive to mandate the 28 EU Member states to implement some of the BEPS proposals at least in their domestic law.

The OECD has published the full BEPS documentation. Director of Taxation Brian Keegan answered questions on the proposals on RTE’s News at One programme on Monday afternoon. You can read more on BEPS on our dedicated BEPS centre.