Bridging cross-border tax compliance gaps: Insights from the BEPS project

In the complex realm of tax reporting, two sharp-minded researchers – Professor Adrian Sawyer from the UC Business School and Professor Kerrie Sadiq from the Queensland University of Technology, set out to unravel the intricacies of the Base Erosion and Profit Shifting (BEPS), focusing specifically on the New Zealand and Australian accounting profession. The key question that Adrian and Kerrie are keen to explore was how prepared the accounting professionals are for the enhanced tax reporting requirements under the BEPS initiative?

Before you read this story further, here are some essential background information.

Base Erosion and Profit Shifting (BEPS) is a term used in taxation that describes strategies used by multinational companies to shift profits from high-tax jurisdictions to low-tax jurisdictions, thus reducing their overall tax liability. BEPS results in significant revenue losses for countries where these companies operate, and challenges the maintenance of a fair and efficient international tax system. To address these issues, the Organisation for Economic Co-operation and Development (OECD) has developed a comprehensive Action Plan to tackle BEPS, providing guidelines and recommendations for countries how to update their domestic tax rules and strengthen international cooperation. This research responds to aspects of this important initiative.

Key takeaway

Back in 2017, through a series of interviews with Chartered Accounting firms as well as revenue officials in New Zealand and Australia, Adrian and Kerrie revealed tensions and different approaches towards meeting the requirements for country-by-country reporting between tax practitioners and their respective revenue authorities. While the diverse landscape tax regulations presented challenges in drawing clear conclusions that would apply to both jurisdictions, their findings shed light on practical implementation concerns and the need for alignment between the professions.

Motivation behind this research

Addressing BEPS issues aligns with the priorities of the OECD and governments globally, including Chartered Accountants Australia & New Zealand (CA-ANZ). Thanks to the generous research grant support from the CA-ANZ ($17,500), Adrian and Kerrie delved into the practical implementation of major tax law changes, providing a unique opportunity to aid practitioners in navigating compliance challenges in both countries.

Anticipated impacts

Two conference papers and a journal article synthesised from this research are enriching ongoing debates in the field. Through initial engagement with stakeholders, insights gleaned from tax practitioners and revenue authorities inform tax policy discussions, shaping how New Zealand and Australia address OECD responses to BEPS concerns.

Research outputs stemming from this research are not confined to academic circles: they have found a place in the classroom at UC Business School. Findings from this research, along with subsequent studies conducted by Adrian and Kerrie, enrich the curriculum of a specialist taxation course - ACCT 359: Further Issues in Advanced Taxation. Students benefit from reading materials and class discussions informed by real-world insights. The research becomes an integral part of discussions around transfer pricing developments, further enhanced by guest lecturers from leading industry practitioners in Chartered Accounting firms.

In the longer term, the research fosters a dialogue amongst tax professionals, potentially leading to the dissemination of best practices for BEPS compliance. It also encourages further academic research on the BEPS issues in Australasia and further afield. Furthermore, this research could influence international jurisdictions grappling with OECD guidance implementation into their domestic legislative frameworks.

Next steps

While the specific project funded by CA-ANZ is concluded, Adrian and Kerrie’s research in the BEPS domain continues. Subsequent to this research, the team secured an additional grant ($44,000 AUD) from CPA Australia in 2018, expanding their investigation to explore how twenty jurisdictions in the Asia-Pacific region administer BEPS actions. Adrian and Kerrie’s ongoing work aligns with the OECD's BEPS 2.0 work, focusing on addressing the taxation of the digital economy. Through continued research and engagement, the team is expected to stay at the forefront of developments in international tax policies.

For further inquiries about this research project, please be free to reach out to Adrian.

Outputs

Book

Sadiq, K., Sawyer, A., McCredie, B. (Eds.) (2019). Tax design and administration in a post-BEPS era: A study of key reform measures in 18 jurisdictions. Fiscal Publications, Birmingham UK, 333p.

Journal articles

Sadiq, K., & Sawyer, A. (2019). Country by country tax reporting: A critical analysis of enhanced regulatory requirements for multinational corporations. Company and Securities Law Journal, 36(7): 570-586.

Sadiq, K., Sawyer, A., McCredie, B. (2019). Jurisdictional responses to base erosion and profit shifting: A study of 19 key domestic tax systems. E-Journal of Tax Research, 16(3): 737-761.

Conference presentations

Sadiq, K., & Sawyer, A. (2017). Enhanced tax reporting requirements under the BEPS project: Preparing the profession. Tax Research Network Conference, Bournemouth University, UK, 4-6 September.

Sadiq, K., & Sawyer, A. (2018). Enhanced tax reporting requirements under the BEPS project: Preparing the profession. Australasian Tax Teachers Association Conference, Monash University, Australia, 17-19 January.

Sadiq, K., Sawyer, A., McCredie, B. (2018). Tax design and administration in a post-BEPS era: A study of key reform measures in 16 countries. The Thirteenth International Tax Administration Conference, Sydney, Australia, 5-6 April.

Sadiq, K., Sawyer, A., McCredie, B. (2018). Tax design and administration in a post-BEPS era: A study of key reform measures in 18 countries. Tax Research Network Conference, Birmingham University, UK, 3-4 September.