The OECD (Organisation for Economic Co-operation and Development) has just published 15 documents setting out the outcomes of two years’ work – due to be approved at a meeting of G20 finance ministers today (Thursday 8 October 2015).
Although there will be challenges for insurers with additional compliance burdens, particularly with the new definition of what creates a taxable presence (Permanent Establishment), an original proposal that would have involved a far higher burden of bureaucracy has not been pursued. It is also a reflection of the ABI’s work that the OECD has incorporated in the final papers the ABI’s criteria of the sort of reinsurance activity that should not raise concerns for tax authorities – namely where it constitutes economic and value-creating activity.
Stephen Pautard, the ABI’s Head of Taxation, said:
"While supporting the aims of the OECD to address weaknesses in the international tax environment, when the work on BEPS (base erosion and profit shifting) began we were very concerned to ensure there was a good understanding of insurance business models - particularly the role of risk and capital and the regulatory environment in which insurers operate.
"It is gratifying to see so much of the ABI’s consultation responses reflected in the documents published this week. Unfortunately, this is not the end of the BEPS process. There will be further work in 2016, both at national and OECD levels, and we will continue to lobby the UK Government and OECD to minimise any inadvertent impacts on insurers."
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