The new international tax regime being adopted across the world presents a serious risk to the regeneration of the oil and gas sector, and must be considered by delegates to the Offshore Technology Conference next week, a leading tax expert at Campbell Dallas is warning.

New OECD tax rules regarding Base Erosion and Profits Shifting (BEPS) assesses businesses on the location of their economic activity. This is a major shift in tax rules and is accompanied by a new requirement for businesses to disclose activities in each jurisdiction.

With the global oil and gas sector undergoing massive restructuring, it is likely that changes to corporate structures will trigger international tax liabilities.  These changes will affect multinationals in particular, and those that fail to comply will suffer major penalties or worse, time draining investigations by HMRC and other national tax authorities.

Ian Williams, Chairman and international tax expert, based at our Aberdeen office is concerned that in the rush to cut costs, businesses could overlook this new regime: “Restructuring creates a ‘trail’ of liabilities that need to be disclosed in line with the new international tax order.  When a business is focused on cost cutting and survival, it often loses sight of its tax liabilities.  It is important that delegates to OTC ensure international tax is considered during discussions on restructuring”.

He added: “Companies will need to be more transparent, publish their tax strategy, demonstrate compliance, and be open to public scrutiny on matters which were previously confidential ”.

“Tax planning opportunities on a major scale will virtually be absent with commonly used cross-border tax structures no longer offering any meaningful cost savings on the effective tax rates (ETRs) in each market. It has never been easier for a tax authority to analyse the performance of a business in each of its locations”.

“Effective use of technology, local knowledge and a new range of systems and processes will help businesses comply.  If businesses do not want to be caught out by international tax they must ensure they are fully aware of the new rules, none more so than for companies undergoing restructuring.”