Businesses will face an increase in financial and administrative burdens under proposals for UK rules on interest deductibility in light of OECD BEPS rules, says Daniel Head, partner of the global transfer pricing services team at KPMG
If your work involves any interaction with your tax colleagues, you’ll probably already be familiar with the aims and objectives of the OECD’s BEPS (Base Erosion and Profit Shifting) project. The UK government’s recently issued consultation document on the deductibility of corporate interest includes an estimated annual tax impact of £1bn per annum (starting from 2017-18). The quantum of this increased level of additional tax take makes this an area that cannot be ignored.
On 12 May, the government published its second consultation document on the implementation of the OECD’s recommendations under BEPS Action 4, Limiting base erosion involving interest deductions and other financial payments. This considers the tax deductibility of corporate interest expense, with a new UK regime due to be introduced from 1 April 2017. This latest consultation seeks stakeholder input on the detailed design of the new rules to inform the drafting of the legislation for Finance Bill 2017.
