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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.

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Robert GORDON
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