Insurance Europe has published its response to a consultation conducted by the Organisation for Economic Cooperation and Development (OECD) on the reports on its pillar two blueprint, which aim to create a single set of international tax rules to address base erosion and profit shifting (BEPS).
While the industry acknowledges the policy objectives of the proposed rules, they remain far-reaching and complex, and would present significant implementation issues for multinational insurers.
Furthermore, changes are needed to better reflect the insurance business model. There should, for example, be a carve-out for insurance and reinsurance services when calculating the effective tax rate.
The OECD should also remove insurance and reinsurance premiums from the list of BEPS “risk payments”, since it does not reflect the nature of these businesses, as premium payments do not correlate to corporate profitability/profit transfer and do not present a greater BEPS risk.
Finally, the industry supports the inclusion of robust dispute prevention and resolution schemes, to allow settlement within timeframes that would not hinder businesses.