Richard Collier and Aamer Rafiq (PwC) look at the recent OECD BEPS discussion paper
The OECD’s work on risk excess capital and recharacterisation has been widely anticipated as potentially representing the biggest shift in thinking under the BEPS programme. Early indications suggested that some radical proposals would be advanced for dealing with ‘excessive capital’. This is what the OECD sees as the BEPS opportunities which arise from the relative ease with which multinational groups can allocate capital to lowly taxed entities due to the fact that the capital can then be invested in assets within the group creating base-eroding payments to the lowly taxed entity concerned. There were also early indications that the OECD would propose preventing or at least severely constraining some types of intra-group risk shifting arrangements. It...
