Difficulties and problems BEPS, what you need to know? Few people know about the existence of an organization for economic cooperation and development.
This company perceives the erosion of its tax base and the withdrawal of income from high tax countries (BEPS) as the main strategy for tax avoidance.
Which applies shortcomings and inconsistencies in the tax code to unnaturally shift profits to places with little taxation.
The Organization for Economic Co-operation and Development is actively fighting such situations. On their official website it is said that they cooperate with 125 countries that share such views.
COMPLICATIONS OF BEPS IN THE DIGITAL ECONOMY
A huge number of entrepreneurs have been creating online platforms that allow them to work anywhere in the world. The OECD is working to determine the physical presence of the enterprise.
Basically, the location of the main governing body of the corporation is analyzed for this. They also use the system for analyzing the generation of the country where the largest profit is listed.
Both methods are only at the development stage; therefore, OECD employees face certain difficulties. Entrepreneurs developing their online business use a variety of methods that are not covered by the term “physical presence of the business.”
For example, entrepreneurs hire employees for remote work.
Such a system of work is not considered static. Workers can connect and disconnect from the project at any time, depending on the plan.
In addition, constant leaps in work can last both a quarter and a whole year. That is why difficulties arise in the fight against BEPS. It is very difficult to make business costs relevant and determine the tax base of an enterprise.
The economy of the modern world is gradually moving into the digital sphere. Therefore, people can work remotely, without reference to a specific country or city.
For this reason, any online company can increase the value of its offer in any country, depending on the desire and capabilities.
PLACE FOR PAYING TAX FOR DIGITAL ECONOMY
This question is being asked by many countries and entrepreneurs. And the United States is convinced that tax payment should be carried out where the added value of the goods takes place (in places where production and production take place).
Some countries are convinced that it is better to pay tax where economic sales occur.
Every entrepreneur whose business is actively developing on the Internet should understand that the tax authorities are engaged in an in-depth analysis of where the value of the goods within the company originates.
Unfortunately, now there is no concrete agreement on how to cope with the challenges in the process of growing digital economy.
Now online entrepreneurs have created new opportunities for themselves, which were not there 15-20 years ago. Now it’s much easier for them to structure a business model and determine their lifestyle.
If earlier these two components could not be separated, now it has become possible to live in one country and engage in business development in another.
The leadership of developed countries is trying to normalize tax revenues to the treasury. The first way, which is very effective, is to analyze where the majority of the revenue comes from.
It also takes into account the jurisdiction of most customers.
The accounting department of the company must compile quarterly, annual financial reports and provide declarations to the tax service. Contact us for more information.