The OECD's Base Erosion and Profit Shifting Project (BEPS) aims to secure and sustain the international tax system and increase tax equity among traditional and digital businesses.
The OECD has developed proposals for tackling tax challenges arising from the digitalisation of the global economy (the BEPS 2.0 Pillar 1 and Pillar 2 blueprints). These would be wide ranging and could have an impact on both asset management businesses and investment funds. Both Pillars contain a proposed exemption for investment funds (and other tax neutral entities) but a number of defects are apparent.
The progress of the proposals, following rounds of consultations, was in doubt as the participation of the US was uncertain. The Biden Presidency has announced support but subject to the adoption of a minimum corporate tax rate of 15% and the withdrawal by certain jurisdictions of digital services taxes targeted at US tech companies. The amended proposals have been adopted by almost all members of the OECD BEPS Inclusive Framework and are expected to be formalised during 2022.
AIMA and the ACC submitted a response to the most recent public consultation, available here. We and other industry representative bodies have been engaging with the OECD to argue for more appropriate exceptions.
The OECD is expected to publish the final form of the Pillar 1 and Pillar 2 measures in late 2021. It is unclear whether any further consultations will be held.
(Last updated: 29 June 2021)