Insurance Europe recently highlighted concerns regarding the Organisation for Economic Cooperation and Development’s (OECD) public discussion draft on base erosion and profit shifting (BEPS) action 3 on strengthening controlled foreign company (CFC) rules.
Insurance Europe stressed that, even though an insurance income could be in a different territory than the risk insured, it does not mean that BEPS activity is taking place. Rather, this is merely a consequence of insurers managing risks on a global basis, including through reinsurance.
It also said that the discussion draft lacks a clearly articulated policy objective, as it attempts to satisfy multiple competing objectives, resulting in a set of complicated and sometimes conflicting proposals.
Concerns were also raised about how the CFC proposals could undermine the detailed work already done under other BEPS actions. As such, Insurance Europe suggested that the CFC rules should be developed to deal with BEPS issues, but that they should not go further than that.