The BEPS Ripple Effect

Multinationals are reevaluating how and where they do business

Brett Weaver

Brett Weaver

ESG Tax Leader, KPMG US

+1 206-913-6697
View more

May 24, 2017 | In this paper, the authors from KPMG LLP's (KPMG) Value Chain Management practice provide insights to help businesses:

  • Understand the potential ripple effects of BEPS reforms beyond tax issues 
  • Take steps to respond to and cope with the new BEPS-driven global landscape.

Value Chain Management at KPMG

KPMG’s Value Chain Management services help companies enhance their value and secure competitive advantage by achieving supply chain and operating model efficiencies. Our Value Chain Management services are led by an integrated team of professionals from our Advisory and Tax practices with years of combined operations experience. Our Value Chain Management Center of Excellence combines these cross-functional teams, technology, and process accelerators to help companies execute on growth opportunities, reduce cost and risk, enhance return on investment, and drive efficiencies across operation

Video highlights

IN this four-minute video, KPMG's Brett Weaver and Jerry Thomson discuss the BEPS ripple effect and how mulitnaitonals are reevaluating how and where they do business.

Transcript | videotaped on May 10, 2017

Brett Weaver (Brett):
So as we all know BEPS is really one of the key factors that's driving companies to think about different operating models that will be effective in the post-BEPS environment. 

BEPS is really going after a perceived abuse of multinationals not paying their fair share of tax.  And BEPS is focused at trying to case companies, multinationals, to recognize profits where they actually add value.  It's in those jurisdictions that they will have the right to tax that income.    

There are a number of changes that are impacting the operating models of multinationals today.  We have everything from industry 4.0, digital labor, robotics, and, of course, BEPS, as we've talked about before, significant regulatory changes.  In many instances, all of these things can align in terms of what would be an optimal operating model.  In some instances, there's going to be some back and forth.  It's really going to be a challenges for companies to figure out the right operating model in this dynamic environment going forward.  

Jerry Thompson (Jerry): As mentioned in our white paper, the profile of companies most impacted by these changes -- it's going to impact -- you know -- any multinational that's operating in multiple environments.  You know some of the compliance elements in terms of how companies have to comply with the rules.  But the companies that really have end-to-end supply chains, that really have integrated front-end, back-end processes across multiple jurisdictions -- they're going to be heavily impacted, as are companies that are heavily reliant on intellectual property.

Brett: These companies are really going to have to pay attention to these significant changes.  And it's going to impact not only their operating model, but potentially their strategy in how they go about doing business.

So as we think about all these interesting and dynamic changes that are happening in our global business environment today, and many of them will move companies to rethink their operating model.  So it's not just going to be tax. That will be a very important part of solving the puzzle, but even if you get the tax answer right, there is going to be a number of real significant considerations.

Jerry: But really it opens up -- you know -- a new operating model from a cross border perspective.  And that means you need to relook at the people that you have to support the organization, the processes that you follow, and most significantly some of the technology changes that companies rely on -- you know, companies rely heavily on technology today that they're going to need to change their systems and how they actually operate. 

Brett: KPMG's value management approach understands that we have all of these dynamics across regulatory, tax, innovation, technologies.  This is a real and interesting time.  All these things are converging and it's happened so quickly.  Value management is really looking at all of these important factors. 

Finding where the value is and building an operating model and putting a tax wrapper around all of that to really optimize the efficiency and really the returns and go after the opportunities that are out there for companies in this really interesting and dynamic business environment.