We were pleased to attend a recent seminar by Greenwoods + Herbert Smith Freehills that discussed the final reports for the OECD’s global base erosion and profit shifting (BEPS) measures released on 5 October 2015. The OECD has estimated an annual loss of US$100 billion to US$240 billion in global tax revenue and has identified 15 actions to close the gaps.
We will leave the detailed analysis of the 2,000 plus pages of rules/guidance to our tax and legal friends Greenwoods + Herbert Smith Freehills, but from a valuation perspective there is likely to be more scrutiny on the outcomes and assumptions for transfer price arrangements (in terms of transfer price and allocation of value), particularly for early stage technology/IP assets and other intangibles defined as ‘Hard to Value Intangibles’.
For those of you that don’t like change, it appears as though Australia’s existing thin capitalisation regime is unlikely to be impacted.
