The OECD’s Base Erosion and Profit Shifting (BEPS) agenda is fundamentally disrupting the way the Private Equity (PE) sector has always worked – but with change comes opportunity.
Each of the 15 BEPS actions are important, but here is just a taster to illustrate how just a few of them will impact the PE sector:
Action 4, which limits the amount of net interest expense that a business can deduct against profits (in most countries to 30% of taxable earnings before EBITDA)
Action 7, designed to prevent the artificial avoidance of ‘permanent establishment’ status,
Actions 8, 9 and 10, which collectively align transfer pricing with value creation, and