On January 24, 2024, KPMG submitted a response to the European Commission’s (EC)
public consultation on the BEFIT initiative.
KPMG welcomes the EC’s ambition to simplify compliance requirements, promote tax certainty and reduce risks of double taxation, but believe that the implementation of the BEFIT proposal in its current form and within the timeline proposed would not contribute to the achievement of this ambition.
The KPMG submission summarises their key concerns:
The creation of new layers of complexity;
Incompatibility of key BEFIT design elements with the design of the Pillar Two rules;
Timing (particularly in light of the implementation timeline of the GloBE rules and the overall impact of BEPS 2.0, which can only be analyzed once the rules have been in place for sufficient time)
The potential negative impact on investment;
Further pressure on the (already) limited resources of MNEs and tax administrations.
KPMG suggests that some elements of the BEFIT proposal could be introduced on a standalone basis (e.g., the cross-border sharing of losses) or addressed directly by Member States.