Insurance Europe has expressed concern over certain proposals relating to base erosion and profit sharing (BEPS) and their potential impact on the insurance sector.
The Organisation for Economic Cooperation and Development’s (OECD) final proposals for the BEPS project, which aims to harmonise global tax rules on profit shifting, require “additional guidance on how the rules would apply in particular for permanent establishments (PEs) outside of the financial sector”.
“For some insurance business models, PEs would be recognised for tax but not for regulatory purposes with nil or minimal additional profit being attributed to them,” Insurance Europe explained.
In a statement, Insurance Europe said: “This would represent a disproportionate compliance burden for insurers, as well as for tax authorities.”
“While the discussion draft recognises that there will be situations in which the profits attributed to the PE will be nil, it fails to propose a solution which would avoid the disproportionate compliance burden that will be created for insurers in these cases”.
Insurance Europe said the final proposals are “disappointing” and it disagrees with the suggestion that “PEs may nevertheless be justified by the potential existence of ‘other tax liabilities’”.
The deadline for comments on Action 7 of the BEPS Action Plan report is 5 September.
The OECD intends to hold a public consultation current BEPS discussion drafts on 11 and 12 October at the OECD Conference Centre in Paris, France.
