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Brexit and what it means for taxEMA Tax Summit—London, September 2016

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OverviewChris MorganHead of Global Tax Policy KPMG


“Brexit means Brexit”

—Who exercises Art 50?

—Timing on negotiations

—Revocable?


Potential tax & legal implications

Brexit

Direct tax implications, e.g:— Parent Subsidiary Directive— State Aid Rules, — Code of Conduct— Free movement of capital (largely) unaffectedIndirect tax implications, e.g:— Access to EUs FTAs; — Customs— VAT— EU excise duty directiveGeneral tax and legal issues, e.g:— Mutual Assistance Directive (AEoI on tax rulings, CBCR)— Arbitration Convention; — Free movement of persons— Employment law (e.g. work time directive)

i


The current situation


Source: Global Counsel – BREXIT: the impact on the UK and the EU

Potential exit scenarios: implicationsNorway Model

SwissModel

TurkishModel

FTA Model WTO Model

EU Direct Tax Directives applicable

Limited or no tariff barriers on trade in goods

Full access to EU Single Market

Single set of regulations for exporting firms

Rules of origin requirements avoided

EU bank passport still available

Influence over EU regulations ?

Able to adopt own approach to regulation ? ? ?

No contribution to the EU budget

State Aid not applicableAbility to negotiate trade agreements independentlyAbility to implement own immigration policy ?


Tax environment: potential implications

Will there be an impact on:— Globalization process of tax matters

— G7, G20, OECD initiatives on BEPS

— How will the balance of the political powers within the EU

be influenced

— Anti-Tax Avoidance Directive

— State-Aid decisions?

— Revised CCCTB proposal (expected November 2016)

— Code of Conduct


What might the UK's tax policy be?

Sour

ce: E

urop

ean

Parli

amen

t

In conversation Robert Van der JagtChairman of EU Tax Centre KPMG

Tim PowerDeputy Director HM Treasury, United Kingdom

Under all scenarios, Brexit has customs implicationsLeon KantersChairman, Trade and Customs EMEA KPMG


Magnitude of BrexitTrade of goods between UK and EU exceeds 350 billion EURO (2015):— EU exports to UK 219.8 billion EURO— UK exports to EU 133.3 billion EURO

On average 3.6 million trucks use the tunnel or ferries from or to Dover in the UK:— Transport by rail, vessel or plane or other ports are excluded

The Netherlands exports 38 billion EURO to UK (2015)— The UK exports 21 billion EURO to the Netherlands— Third and fourth important export market


EU Free Trade Agreements


Case study exit scenariosCURRENT SITUATION

— Assembly location in UK— Assembled product duty rate 10%— Import components:

— Mexico 25— S Korea 25— Japan 5

— Added value UK 45— Markets:

— The Netherlands— Czech Republic— Belgium— France— USA

— Import Mexico and S Korea applying FTA— Duty paid for Japan components— IPR applied for re-export to USA— Intra community supply to EU Member States

UK

FR

B

CZ

NL

US

EU

Mexico

Japan

Korea

25

25

5


Case study exit scenariosPOST-BREXIT SITUATION

— Assembly location in UK— Assembled product duty rate 10%— FTA condition 60% added value country of origin (UK)— Import components:

— Mexico 25— S Korea 25— Japan 5

— Added value UK 45— Markets:

— The Netherlands— Czech Republic— Belgium— France— USA

— Import Mexico and S Korea applying FTA?— Origin requirement UK are not met 10% duty charge— (Re) Export to EU Member States— No duty paid for Japan components and potentially for

Mexico and S Korea by applying IPR

UK

FR

B

CZ

NL

>60

US

EU

Mexico

Japan

Korea

25

25

5


Client ERP

systems

DATA TAX INTELLIGENCE CENTER

REPORTS

Declaration Data

Data Cubing Monitoring

We have standard ERP extraction programs / plug-ins that extract all relevant data in the correct format. Low effort required from client IT department.

In addition we request data from clients, customs authorities, customs agents, or IT customs software providers (customs declarations software).

All data is processed in the Tax Intelligence Center where the Cubes are created and VAT, Customs & Trade and Transfer Pricing determination logic is applied to the received data.

The Tax Intelligence dashboards are populated / refreshed with the generated Cubes and are ready-to-use by the client. KPMG has over the 100 standard (exception) analyses available. Client-specific analyses are possible as well.

We make use of Global Trade Content via external sources. (e.g. Taric databases, export control, free trade agreements).

External Sources

Data Extraction

KPMG Tax Intelligence Solution to determine Brexit impact

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Polling


Polling questions 1. How important is it for your company to have access to the various direct tax directives

—Parent Subsidiary Directive—Interest and Royalties Directive—Mutual Assistance Directive—Arbitration Convention

2. How important is it for your company to have access to the single market3. Are you thinking of relocating from the UK following Brexit:

—Head office/regional headquarters —Certain other activities

4. Should the UK actively use tax policy as an instrument of competition?5. What should the UK do about the rate of CT?

Conclusion


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Feedback

Fragmentation and controversyTax in a post-BEPS world




ContactsChristopher MorganHead of Global Tax [email protected]

Robert Van der Jagt Chairman of EU Tax Centre [email protected]

Leon KantersChairman Trade & Customs [email protected]

Tim PowerDeputy DirectorHM Treasury, United Kingdom

mailto:[email protected]



© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

The KPMG name and logo are registered trademarks or trademarks of KPMG International.

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brexit and what it means for tax - · pdf filebrexit and what it means for tax. ema tax...

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