Bill Dodwell, head of tax policy at Deloitte, said: "The OECD's work on base erosion and profit shifting (BEPS) is going to be key in ensuring that aspects of international company taxation rules are brought up to date. It's going to be essential, for example, to ensure that there aren't inadvertent adverse knock-on effects on investment, jobs and growth, or on small, developing economies. The rules need to take account of the digital world.
"The Chancellor reconfirmed today the Government's commitment to supporting the OECD's work on addressing BEPS by multinational companies. Governments are seeking to protect their corporate tax base and create a modern international tax system that is fit for purpose for today's globalised businesses, reflecting the transformation created by the internet. The OECD is leading an international response, focussing on key areas of concern: transfer pricing of intangibles, taxing rights in relation to internet business, tax deductions for intra-group interest, and harmful low tax regimes. Next step is an action plan from the OECD for the G8 meeting in June 2013, setting out specific measures, the means to implement those measures and a timetable. The project has the unanimous support of OECD members, together with observers such as China and India and Russia, and political backing from the G20.
"Three working groups have been set up so far: the UK will lead on transfer pricing, Germany on maintenance of the tax base and France and the US will jointly lead on which country has the right to tax internet businesses."
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