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Increasing use of tax-transparent entities by private groups due to BEPS

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Published on 01 Apr 16 by "THE TAX SPECIALIST" JOURNAL ARTICLE

To date, the effect of the base erosion and profit shifting (BEPS) project is that Australian-owned private companies whose business could be affected by ecommerce are largely able to avoid high rates of foreign taxation. This allows significant deferral of Australian tax liability until the profits from the overseas activities are ultimately released into the hands of Australian resident individuals. This would often involve the use of tax haven subsidiaries of an Australian company, selling into a world market, without a taxable presence in the country of the customer.

The result of implementation of one or more of the action items of the BEPS project may create a situation where Australian private companies’ non-resident subsidiaries will increasingly become liable to more foreign taxes than in the past. This article examines the tax-transparent entities that might be available to owners of Australian-owned private companies in several countries, and compares the pros and cons of each.

Author profile

Robert Gordon CTA
Robert BA LLB LLM FCPA CTA TEP ADIT was first admitted as a lawyer in 1978, and initially worked as an accountant with Big Four firms in Sydney and Melbourne, then as a solicitor in Sydney and Melbourne, becoming a tax partner at lawyers, Corrs Chambers Westgarth. From 1992 he was a member of the NSW Bar specializing in tax, with a special interest in international tax, including offshore trusts and estates. In 2006 he had a one year sabbatical in London where he studied UK and international tax. In 2007 he moved to Melbourne and became a full member of the Victorian Bar. In Nov 2012, after more than 20 years at the NSW and Victorian Bars, he became a consultant at Pointon Partners, Lawyers & Trademark Attorneys. For more articles, see www.robertgordontax.com. - Current at 01 April 2016
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