BEPS Compliance：What are the regulators looking at?
BEPS（Base Erosion and Profit Shifting）yesOECD/G20drivenGlobal Anti-Tax Avoidance Framework，The core objective is to prevent cross-border groups from passing on mismatched arrangements、Profits shifting from low-tax jurisdictions or “shell” structures erode the tax base of various countries。With the exchange of information、Electronic auditing and strengthening cross-border cooperation，BEPS compliance has moved from a “tax optimization option” to a necessity for cross-border operationsbasic threshold。
For businesses，Supervisory attention usually focuses on three types of evidence chains：(1) Whether profits are consistent with value creation(Function/Risk/Asset and Profit Match)、(2) Whether the transaction has verifiable commercial substance(personnel、office、decision making、financial capacity)、(3) Whether the group data and documents can be reviewed(main file/local file、country report、Pillar Two caliber data and system traces)。
The core problems that Hong Kong Information Communications can solve for you
Identify coverage、ETR sensitive points、Deferred Tax and Safe Harbor Applicability，Form gap analysis and implementation roadmap。
Refactoring functionality and risk allocation、Pricing mechanisms and benchmarking methods，Establish auditable comparable analysis and supporting evidence。
Breaking down “substance” into organization、post、authorization matrix、Meeting minutes and operational data，Avoid being identified as a shell arrangement。
unified finance、Tax and management reporting standards，Open the transaction ledger、Related party list and reconciliation rules，Reduce false positives/negatives。
Organize materials with “question list + evidence catalog + response caliber”，Reduce the risk of dispute escalation and shorten response cycles。
to fintech、pay、Cross-border capital flow business，Collaborative account penetration、Beneficial owner identification and transaction interpretability。
Deliverables list (can be used directly for internal control and auditing)
According to group size、Jurisdiction and business model，Hong Kong Xintong usually delivers the following results (combination on demand)：
- BEPS Gap Diagnosis Report：Risk point、Impact amount range、Priority and rectification paths
- Sorting and accounting of group related transactions：transaction type、contract、Invoicing/reconciliation、Pricing Parameters and Responsible Persons
- Transfer Pricing Documentation Package：Functional risk analysis、Comparable analysis framework、Pricing policy and annual update mechanism
- Economic substance landing package：Organizational structure、Job responsibilities、authorization matrix、Board/Management Meeting Minutes Template、KPIs and footprint requirements
- Pillar Two Prep Pack：List of data fields、Calculation logic description、caliber mapping、System/Form Templates Vs.Compliance Calendar
- Tax audit response package：Q&A、Evidence Catalog、Material version management and external communication strategy
If you need to contact the bank、auditorOr connect with overseas tax consultants，we can provideEnglish version of management instructionsand evidence index，Improve communication efficiency。
Implementation process (from diagnosis to auditable implementation)
Explicitly cover entities/countries、Related transaction type、Reporting standards and key schedules；Output data list and interview plan。
Assessing a permanent establishment、withholding tax、TP、economic substance、CFC/anti-tax avoidance and Pillar Two sensitive points，form gap matrix。
Determine target architecture and pricing policy，fall to the organization、process、Contracts and data fields；Develop an executable rectification roadmap。
Compile/update TP and Pillar Two documentation，Create meeting minutes、Approval traces、Ledger and annual update mechanism。
Assistance with audit and tax inquiries；Annually updated transaction data and documentation，Keep the caliber consistent and the evidence consistent。
Cost and cycle (reference interval)
BEPS compliance consultation is not a license application，No unified government application fee。The project budget should be based on the number of group entities、Jurisdictions covered、Related transaction type、Pillar Two Applicability、Existing data quality and whether auditing is needed to support separate accounting。
| Cost module | Accounting basis | Common deliveries | Quotation method |
|---|---|---|---|
| Scope and Gap Diagnosis | entity、jurisdiction、Transaction type and data completeness | risk list、Data gaps and implementation roadmap | Quotation after confirmation of scope |
| transfer pricing documentation | Number of related transactions、Functional risk analysis and comparable data | main document、Local documentation or pricing support materials | Accounting by entity and transaction type |
| Pillar Two data preparation | Group size、Accounting caliber、Data Systems and Safe Harbor Analysis | data fields、Caliber mapping and calculation support | Calculated by coverage and data complexity |
| Economic substance and process rectification | personnel、decision making、contract、Systems and evidence gaps | system、process、List of Responsibilities and Evidence | Calculated based on rectification workload |
| Reporting or audit support | Inquiry rounds、Data language and third-party collaboration | Reply materials、Evidence indexing and version management | Calculate by stage or actual working hours |
Before the scope is confirmed，It is not appropriate to use fees for other licensing projects to extrapolate BEPS budgets。Can refer to OECD/G20 BEPS official information。
Substantive operational verification of BEPS compliance consulting
BEPS compliance cannot just look at the tax rate in the place of registration，Instead, the group entity、actual management、Related party transactions、functional risk、Personnel assets and cross-border profit arrangements are placed in the same factual record。
- Create a group entity、control relationship、actual place of business、Tax residence and permanent establishment map。
- Organize related party transaction contracts、functional risk、Pricing basis、bill、Evidence of use of personnel and assets。
- Evaluate country-by-country reports by applicable jurisdiction、main document、local document、Economic substance and reporting obligations。
- Combine tax advice with bank KYC、Company annual review、Financial statements are consistent with actual cash flow。
Official verification：OECD BEPS data。Specific obligations must be combined with the subject、business、Customer location and latest regulatory confirmation。
FAQ：The most frequently asked BEPS questions from businesses
The audit report mainly proves the fairness of the financial statements，It cannot replace the evidence chain for related party transaction pricing required by the tax authorities.。The focus of the TP/BEPS document is "Why is it priced this way?、Comparability basis、Functional risk and profit matching”，Both have different uses。
Usually related to group merger caliber size threshold and location rules；Even if it is not within the mandatory scope，Many companies also need to conduct "impact assessment and data preparation"，to satisfy investors、Due diligence requirements between auditors and banks。
Common entry points include：Profits have been concentrated in low-tax locations for a long time but lack of personnel/decision-making/risk-taking；Service fees/royalties lack proof of benefit；The contract is inconsistent with the actual execution；Related transaction reconciliation and invoice chain are not closed loop；Missing minutes of key management decisions and meetings。
The goal of compliance is to match tax burden with value creation。If the existing structure does not match the substance，Pricing policies may need to be adjusted、Profit distribution or entity functions，thus affecting the distribution of tax burden；But this is usually better than the tax backpay resulting from passive audits.、Fines and reputational risks are more controllable。
Can。Cross-border payment collection、pay、Fintech or groups that open accounts in multiple places，It is recommended to link the BEPS evidence chain with beneficial owner/account penetration/transaction interpretive design.，Reduce repeated inquiries and compliance friction triggered by information exchange。
