London
24 May 2017
Reporter: Becky Butcher
Funds need to keep an eye on BEPS negotiations
Fund participants were encouraged at Guernsey’s Fund Forum to pay close attention to negotiations over base erosion and profit sharing (BEPS) rules.

The Organisation for Economic Cooperation and Development’s (OECD) BEPS project aims to harmonise global rules.

Speaking at Guernsey’s Fund Forum event on 11 May, tax experts Tony Mancini of KPMG and Abhijay Jain of PwC stressed that fund participants should remain alert as to how negotiations at the OECD unfold.

Mancini said: “BEPS is not intended for the investment management sector, but the problem we have is that we could be collateral damage. There’s a steamroller that if it carries on we could just get squashed.”

Groups such as the British Private Equity & Venture Capital Association and Alternative Investment Management Association are pushing back to ensure that exemptions for funds are guaranteed, but BEPS still has a long way to go, according to Mancini.

A present danger is that the brains behind the BEPS principles do not necessarily appreciate the importance of investment funds, nor how they operate.

Mancini added: “A continuing focus on the term ‘substance’ and what constituted ‘substance’ from both funds and commercial business perspectives had created a lot of noise—much of it misdirected—which could lead to BEPS and related EU initiatives being misapplied to the funds sector.”

In agreement, Jain said: “What this substance argument is doing is providing ammunition to local countries and local governments and local tax authorities to say, ‘you know what, I’m going to ignore all of that and I’m going to penalise you’. So, if you are doing investment into an Italian business, Italy will argue that you have a business of fund management in Italy itself and they will tax you for every dime you make in Italy.”

“That’s where I think it becomes something the fund management industry does need to watch out for, because the application is not uniform. Every country has its own version of what BEPS really means.”

More Industry news
The latest news from Asset Servicing Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Euroclear sees strong H1 asset growth
21 July 2017 | Frankfurt | Reporter: Jenna Lomax
Post-trade service provider Euroclear saw its asset under safekeeping increase by 5 percent to €28.4 trillion in the first half of 2017
Northern Trust commits to EU hub
19 July 2017 | Luxembourg | Reporter: Stephanie Palmer
Northern Trust is set to establish a banking presence in Luxembourg, and has appointed a new head of continental Europe, in a move that it says is “further establishing its commitment to the region”
NSE goes live with Nasdaq surveillance solution
17 July 2017 | Lagos | Reporter: Stephanie Palmer
Nigerian Stock Exchange has gone live with a new market surveillance platform powered by the Nasdaq SMARTS solution
Multifonds: Asset management industry to innovate from the inside
11 July 2017 | London | Reporter: Stephanie Palmer
Innovation in asset management will come from within the industry, rather than from start-ups or disruptors, according to a survey from Multifonds
AxiomSL sees boost from strategic investment
06 July 2017 | New York | Reporter: Stephanie Palmer
Data management and regulatory reporting technology provider AxiomSL has received its first institutional financing, with a strategic investment from TCV
Harmonisation will mean success for T2S
29 June 2017 | Warsaw | Reporter: Stephanie Palmer
More harmonisation and standardisation is required for the market to fully realise the intended benefits of the Target2-Securities platform
70 percent say cyber crime will lead to financial crisis
28 June 2017 | Warsaw | Reporter: Stephanie Palmer
The next financial crisis is ‘highly likely’ to be caused by cyber crime, and the only way to manage this is for the industry to come together, according to a panel session at The Network Forum in Warsaw
More Industry news